Q: What is the telephone tax refund?
A: The federal government installed a “luxury tax” at the turn of the last century to apply to the wealthiest Americans who could afford long-distance telephone service. The federal excise tax on long-distance phone calls was enacted to help pay for the Spanish American War. It’s been nearly 109 years since Teddy Roosevelt and the Rough Riders charged up
San Juan Hill. And yet the IRS continued to collect the long-distance tax long after the signing of the Treaty of Paris ended the war. Go figure. The war lasted less than a year and yet the federal government collected the tax for more than a century. From Capitol Hill, I led efforts to disconnect the three percent surcharge tacked onto monthly long-distance phone bills for households and businesses across the country. It had long out-lived its intended purpose. The “temporary” long-distance tax goes to show how difficult it is to repeal a revenue source once it’s on Uncle Sam’s menu. Having represented Iowans since 1981 in the U.S. Senate, it’s become clear to me Congress can’t tax the American people high enough to satisfy its spending appetite. Despite the uphill battle, I’m as committed as ever to lead the charge against overspending and overtaxing inWashington. I’ve got some welcome news for taxpayers and telephone customers this tax season. The U.S. Treasury at long last hung up on its appeal of federal court orders to stop collecting the outdated long-distance tax. At long last, Americans can say “so long” to the tax enacted so very long ago to pay for the Spanish American War of 1898.
Q: Who is eligible for the refund?
A: Individual taxpayers, businesses and nonprofit organizations who paid the tax are in store for a one-time refund. The refund period applies to telephone taxes paid after Feb. 28, 2003 up to Aug. 1, 2006. (This time frame correlates to a statute of limitations which applies to tax refunds of this nature.) The IRS will refund taxes collected for long-distance service and for bundled services that don’t distinguish between long distance and local calls. (Note the telephone tax still applies to local-only services.) If taxpayers choose to base their refund request on the actual amount paid, they need to file Form 8913, Credit for Federal Telephone Excise Tax Paid. Businesses and nonprofits must complete Form 8913 to recoup their full refund. However, if individual taxpayers choose not to rifle through 41 months of phone bills, they may request the standard refund, ranging from $30 to $60, depending on size of household. This option requires only one additional line on their federal tax returns. Some households may stand to gain substantially more than the standard refund if their long-distance or bundled services were above average. Those individuals will need to make that judgment. In any event, I encourage Iowans to remember this one-time telephone tax refund as they prepare their 2006 federal tax returns.