IRS Hangs Up On 19th-Century Phone Tax

(AP)  Consumers can claim a standard $30 to $60 refund next year for a tax on long-distance telephone calls that the government declared invalid, the Internal Revenue Service announced Thursday.

Telephone customers had been paying the 3 percent federal excise tax on local and long-distance service. The government this month stopped collecting the tax on long-distance calls after businesses repeatedly fought the tax in court and won.

Next year, consumers can use their 2006 tax returns to claim a refund on long-distance telephone taxes paid since March 2003.

The standard refund starts at $30 and increases by $10 for each additional exemption claimed on a tax return, up to $60. A married couple with two dependent children, for example, could claim a $60 refund.

The IRS will add a line to the 2006 tax returns mailed next spring, enabling individuals to claim the refund. The tax agency will also create a special form for people not otherwise required to file tax returns, so they can request their money back.

"These amounts save taxpayers from locating 41 months of old phone bills and analyzing these bills to determine the taxes paid," said IRS Commissioner Mark Everson. "We believe the standard amounts are both reasonable and fair."

The IRS said it based the refund amounts on telephone usage data, and that the standard amounts reflect averages for households of different sizes.

Individuals do not have to use the standard amount. Consumers who have their old phone bills can instead add up the taxes they paid between March 2003 and July 2006 and apply for a refund.

The tax dates back to the late 19th century and the Spanish-American War, when telephones were a luxury and the government needed revenue.

In recent years, multiple businesses successfully challenged the tax because it applied to long-distance calls billed according to time and distance, a billing formula mostly replaced by flat-rate calling plans.

The Treasury Department has said it expects to return $13 billion to consumers, including businesses and other organizations.

Businesses and nonprofit organizations will have to compute their taxes paid before applying for a refund. The IRS said it's looking to make that calculation easier through methods that might allow them to estimate the taxes paid. The IRS will take comments on that topic through Sept. 15 through a special e-mail, Telephone.Tax(at)irs.gov.

[bobwitmer1]

The standard refund will be $30, with a $10 increase for each additional exemption? Why will a married couple with two kids get $60 back, and, I only get $30? How many long distance phone calls can two kids make?