August 1, 2006
Companies Discover It Isn't Easy to Claim Phone-Tax Refunds
The Internal Revenue Service plans to refund $13 billion in phone taxes to businesses and consumers following court rulings that the taxes were illegal, but getting more than a nominal refund could cost a bundle, reports the Wall Street Journal.
The Treasury Department announced in May that it would stop collecting the 3% excise tax on long-distance telephone service and refund billions of dollars to 25 million businesses and 150 million individuals. Although the tax dates back to the Spanish-American War, it would refund only taxes imposed starting March 2003 through mid-2006.
For consumers, getting the refund will be fairly simple. The IRS is likely to set an amount -- probably from $30 to $70, depending on usage and the number of telephones in the household -- that taxpayers can get without documentation. It seems likely to be much more complicated for businesses to get the money. The tax was based on the length and distance of each call; businesses often have hundreds or even thousands of phones, both land-line and wireless. Calculating the refunds is daunting for small businesses that might not have archives of old phone records going back several years. Most phone companies supply the records but charge for them.
Big companies say figuring it all out is a headache. "This is a monumental task and for us requires quite a substantial investigation," says John Simley, a spokesman for Wal-Mart which has thousands of phone lines provided by several different phone companies.
To simplify the refund process, the IRS plans to include a special line on 2006 tax returns that businesses can use to claim their refunds. Businesses can reduce their tax payments by the amount of their claim; they won't have to wait for the government to issue a separate check.
Related articles:
-- Wireless Consumers Get Excise Tax Reprieve
-- U.S. May Stop, Refund Excise Tax On Phone Service
-- 3 Percent Fee On Cell Phones Started 107 Years Ago
The Permanent Link to this page is: http://www.textually.org/textually/archives/2006/08/013095.htm
