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Federal Telephone Tax Refund
FAQs
1. What is the
telephone tax refund?
2. Why is
the government refunding these taxes?
3. How do I
get the telephone tax refund?
4. Who is
eligible to request the telephone tax refund?
5. What is
the standard amount?
6. What
forms do I file to request the refund?
7. How did
the government determine the standard amounts?
8. Can I
e-file to get this refund?
9. I don’t
have to file an income-tax return. How do I get the
telephone tax refund?
10. Do
internet long-distance plans qualify for the refund?
11. Why do I
only get a refund for the past few years?
12, How do I
determine how much federal excise tax I have paid on my
long-distance service?
13, What if
I don’t know whether I paid this long-distance tax and I
don’t have my phone bills?
14. Who do I
call?
15.
What do I need to do if WJH is preparing my return?
16. What do
I have to do now?
17. Will the
IRS pay interest on the refunded telephone tax?
18. How do I
decide if it’s better for me to use the actual or take the
standard amount?
19. Do I
have to itemize to claim this refund?
20. Will I
get a separate check?
21. What is the total amount the government
expects to refund?
If you have any other questions, please
contact us.
1. What is
the telephone tax refund?
The telephone tax refund
is a one-time payment available on your 2006 federal income
tax return, designed to refund previously collected
long-distance federal excise taxes. It is available to
anyone who paid long-distance taxes on landline, cell phone
or Voice over Internet Protocol (VoIP) service.
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2. Why is
the government refunding these taxes?
Several recent federal
court decisions have held that the tax does not apply to
long-distance service as it is billed today. The IRS is
following these decisions and refunding the portion of the
tax charged on long-distance calls. The IRS is also
refunding taxes collected on telephone service under plans
that do not differentiate between long distance and local
calls.
The telephone tax
continues to apply to local-only service, and the IRS is not
refunding taxes charged on local-only service.
The IRS will refund to
you the taxes on long-distance service billed to you for the
period after Feb 28, 2003 and before Aug 1, 2006. Taxpayers
should request this refund next year when they file their
2006 tax returns.
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3. How do
I get the telephone tax refund?
In general, anyone who
paid the long-distance telephone tax will get the refund on
their 2006 federal income tax return. This includes
individuals, businesses and nonprofit organizations. The
2006 return is usually filed during 2007.
The IRS is making it
easier for taxpayers by offering a standard refund amount
between $30 and $60, so they don’t need to gather old phone
bills. Taxpayers who choose the standard amount will only
need to fill out one line on their tax returns. The standard
amount is based on actual telephone usage data and the
amount applicable to a family or other household reflects
the long-distance phone tax paid by similarly sized families
or households. Using this amount is the easiest way for
taxpayers to get their refunds and avoid gathering 41 months
of old phone records.
Using the standard
refund amount for individuals is optional. See the
answer to question #5 for details on the standard amount and
the answer to question #12 for information for calculating
the amount based on actual excise tax paid.
Businesses and
nonprofits must fill out the new Form 8913 and base their
refund requests on the actual amount of tax they paid. The
IRS is considering an estimation method that businesses and
nonprofits could use for figuring the tax paid and is asking
for public suggestions on potential methodologies that are
both accurate and relatively easy for taxpayers to use.
Comments should be e-mailed to
Telephone.Tax@irs.gov
and must be received by Sept. 15, 2006.
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4. Who is
eligible to request the telephone tax refund?
In general, any
individual, business or nonprofit organization that paid
long-distance tax for service billed after Feb 28, 2003 and
before Aug 1, 2006 is eligible to request the refund.
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5. What is
the standard amount?
Individual taxpayers can
take a standard amount from $30 to $60 based on the number
of exemptions claimed on their tax return. For those
claiming:
• one
exemption, the standard refund amount is:
$30
• two exemptions, the standard refund
amount is: $40
• three exemptions, the standard refund
amount is: $50
• four exemptions or more, the standard
refund amount is: $60
The instructions to the
2006 1040 tax forms will provide more information on how to
determine the correct number of exemptions. (Because the
term, “exemptions” does not appear on Form 1040EZ, people
who fill out this form should follow the instructions
carefully.)
The standard amount is based on actual telephone usage data,
and the amount applicable to a family or other household
reflects the long-distance phone tax paid by similarly sized
families or households. Using this amount is the easiest way
for taxpayers to get their refund and avoid gathering 41
months of old phone records.
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6. What
forms do I file to request the refund?
For many individual
taxpayers who want to take the standard amount, there are no
additional forms to file, and they only need to fill out one
additional line on their regular income-tax return.
Individuals choosing the
standard amount can simply fill in the amount on Form 1040,
Form 1040A, Form 1040NR or Form 1040EZ. People who don't
need to file a return can use a new, simple form (Form
1040EZ-T) to choose the standard amount.
Taking the standard
amount is optional. It is also the easiest way to get
refunds. A married couple filing a joint return with two
dependent children, for example, will be eligible for the
maximum standard amount of $60.
Individuals who decide
not to use the standard amount must figure their refund
using the actual amount of tax they paid. To choose this
option, taxpayers can fill out Form 8913 and attach it to
their regular income-tax returns (Forms 1040, 1040A, 1040NR
or 1040EZ, or the new simple Form 1040EZ-T for people who
don't need to file a regular income-tax return). .
The standard amount is
not available to businesses and nonprofits. Accordingly,
they must fill out Form 8913 and base their refund requests
on the actual amount of tax they paid. Businesses should
attach this form to the income-tax returns they normally
file -- Form 1120, Form 1120S, Form 1065 or Form 1041.
Nonprofits, including churches, charities and other
tax-exempt organizations, attach it to Form 990-T. The IRS
is considering an estimation method businesses and
nonprofits can use for figuring out the amounts to be
included on Form 8913.
7. How did
the government determine the standard amounts?
Telephone industry and
IRS data were used to determine the refundable standard
amounts. Telephone industry data showed that long distance
spending correlated directly with the number of persons in a
household; therefore, a scaled refund structure was selected
based on the number of exemptions claimed on the tax return.
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8. Can I
e-file to get this refund?
Yes. Virtually anyone
who files an individual return qualifies for electronic
filing, and the telephone tax refund is one of many tax
benefits that can be reported on an e-filed return. Whether
you file electronically or on paper, you can get your refund
even faster by having it deposited directly into your
checking or savings account.
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9. I don’t have to file an income-tax return.
How do I get the telephone tax refund?
For those people who do
not otherwise have to file a tax return, there is a new
simple form (1040EZ-T) that can be used to get this refund.
If you choose the standard amount, all you need to do is
fill out this simple form using the number of exemptions you
are eligible to claim. For example, a married couple with
two dependent children (for a total of four exemptions) will
be eligible for the maximum standard amount of $60.
If you decide not to use
the standard amount, you must figure your refund using the
actual amount of tax paid. To choose this option, you must
fill out an additional form (Form 8913) and attach it to
Form 1040EZ-T.
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10. Do
internet long-distance plans qualify for the refund?
Yes. If you paid the
federal excise tax on your long-distance internet plan, you
can request the telephone tax refund.
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11. Why do
I only get a refund for the past few years?
Under the applicable
statute of limitations in the Internal Revenue Code, the IRS
is generally not permitted to refund taxes that were paid
more than three years before the date on which the refund
program was announced. Accordingly, the telephone tax refund
is available for long-distance taxes billed after Feb. 28,
2003, and before Aug. 1, 2006.
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12, How do
I determine how much federal excise tax I have paid on my
long-distance service?
Taxpayers who choose to
base their refund requests on the actual amount of tax paid
should review their phone bills since Feb. 28, 2003. Taxes
paid on local-only service are not eligible for the refund.
In general, federal excise taxes paid on other types of
service qualify. Federal access charges and state or local
taxes and charges are not eligible for the refund.
On the other hand,
taxpayers who choose the standard amount need not determine
the amount of tax they paid. The standard amount is based on
actual telephone usage data, and the amount applicable to a
family or other household reflects the long-distance phone
tax paid by similarly sized families or households. Using
this amount is the easiest way for taxpayers to get their
refund and avoid gathering 41 months of old phone records.
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13, What
if I don’t know whether I paid this long-distance tax and I
don’t have my phone bills?
To get the telephone tax
refund, you must have paid the tax. If you don’t have your
telephone bills, the only way to be sure if you paid the tax
for long distance is to check with your service provider.
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14. Who do
I call for help?
If we are preparing the
return at WJH see the next question.
If you are preparing
your own return, instructions for
requesting this refund will be included with your tax forms
and at irs.gov. Therefore, most people will not need to call
the IRS. If you decide to figure the actual amount and need
to obtain copies of your phone bills, you should contact
your phone service provider. Telephone companies may
charge for copies of past bills.
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15. What do I
need to do if WJH is preparing my return?
You need to decide if
you want to take the standard refund amount or have the
deduction calculated based on your actual excise tax
payments. We can help with this decision.
If you want to use the
standard amount just let us know. If you want to use
the actual amount paid you also need to let us know and
provide the excise tax information.
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16. What
do I have to do now?
In most cases, nothing.
Taxpayers will request this refund on their 2006 return.
Accordingly, the IRS will begin accepting refund requests in
January 2007.
The only decision you
have to make is whether to use the standard amount or the
amount of tax you actually paid. To take the standard
amount, you don’t need to do anything now. You can figure it
when you fill out your 2006 return.
If you are considering
using the actual expense method, you may want to start
gathering your phone bills since Feb. 28, 2003. As with any
other line item on your return, starting early and keeping
good records always makes the tax-preparation process
easier.
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17. Will
the IRS pay interest on the refunded telephone tax?
The standard amount
includes interest. The IRS will issue guidance later this
year relating to the payment of interest where the actual
expense method is used.
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18. How do
I decide if it’s better for me to use the actual or take the
standard amount?
You can use whichever
method gives you the larger refund. The standard amount is
based on actual telephone usage data and the amount
applicable to a family or other household reflects the
long-distance phone tax paid by similarly sized families or
households. Using this amount is the easiest way for
taxpayers to get their refund and avoid gathering 41 months
of old phone records.
(Click here to return to top of page.)
19. Do I
have to itemize to claim this refund?
No. Because this is a
refund of taxes previously paid, it does not matter whether
you itemize or take the standard deduction.
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20. Will I
get a separate check?
No. The telephone tax
refund will be treated as a one-time payment on your 2006
return. Accordingly, it will reduce the amount you owe on
your return or increase the amount of your refund.
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21. What is the total amount the government
expects to refund?
Economists at the U.S.
Department of the Treasury estimate the amount refunded to
individuals will be about $10 billion.
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