Tax file: More phone-tax follies

April 1, 2007
Even though the federal government agreed last summer to refund telephone excise taxes collected since March 2003 on long-distance service, several uncertainties remain. Trucking companies and owner-operators, who make more long-distance calls than most, are likely to be affected. The Internal Revenue Service designed relatively simple procedures for businesses and individuals to claim the refunds.

Even though the federal government agreed last summer to refund telephone excise taxes collected since March 2003 on long-distance service, several uncertainties remain. Trucking companies and owner-operators, who make more long-distance calls than most, are likely to be affected.

The Internal Revenue Service designed relatively simple procedures for businesses and individuals to claim the refunds. But millions of taxpayers failed to file claims along with their income tax returns, and the IRS has been publicizing the refund. At the same time, both the IRS and the Justice Department's Tax Division have warned they will be on the lookout for exaggerated claims.

Meanwhile, several suits were filed last year seeking larger refunds. These suits appear to be far from resolution but could result in refunds for earlier periods.

Although the refunds apply only to the long-distance portion of any tax paid, Congress may act to repeal the tax on local service. On February 28, the top Democratic and Republican members of a House Ways and Means subcommittee introduced H.R. 1194, which would repeal the tax in the future. Similar bills were introduced earlier in the Senate.

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