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Diane Miller

Telephone tax refunds a one time opportunity

    The Internal Revenue Service will refund an estimated $10 billion in 2007 to telephone customers who paid federal tax on their long-distance service during the past three years. Federal courts ruled that the IRS was not justified in collecting this excise tax, collected by telephone service companies through customer bills. As of September 2006, the tax no longer appears on telephone bills.
    Telephone customers who had long-distance service anytime in the months after February 28, 2003 and before August 1, 2006 (the covered period) may qualify for the refund if they had either a standard land-line telephone with long distance service, cell phone service, or Internet long-distance calling plans. Long-distance service through prepaid long-distance cards does not qualify for refunds of this tax.
    The telephone tax refund for individuals will normally range from $30 to $60, depending on family size. The IRS has calculated standard refund amounts based on the size of a filer’s family in 2006: $30 for one exemption (i.e. a single person), $40 for two exemptions (i.e. a filer with one child or a married couple), $50 for three exemptions (i.e. filer with two children or a married couple with one child), or $60 for four or more exemptions (i.e. filer with three or more children or a married couple with two or more children). Individual taxpayers can file a request for the telephone tax refund with any 2006 federal tax return (1040, 1040A or 1040EZ). All three forms have specific instructions for this refund.
    By some estimates, nearly 15 million households that qualify will miss out on the telephone tax refund because they will not file federal tax returns. Most are low-income households, half headed by someone over 65. Many of these non-filers may be unaware of their eligibility for the refund. Individuals entitled to the telephone tax refund who otherwise have no reason to file a federal tax return may use a special short form, the 1040EZ-T, “Request for Refund of Federal Telephone Excise Tax.” The 1040EZ-T, available online or from your local library, is NOT a tax return and can only be used to request the telephone tax refund.
    Businesses and non-profit organizations cannot claim the standard amounts, and are required to use Form 8913 (Credit for Federal Excise Tax Paid). You can request the exact amount of the long-distance tax you paid each month for all services during the covered period instead of the standard refund amounts by completing Form 8913 and attaching it to your return. You will need copies of all your telephone bills during the covered period to complete Form 8913. Refunds do not apply to taxes paid on local telephone service or federal access charges.

    For more information on family money management contact Diane at (912) 871-0504, dianem@uga.edu, or www.ugaextension.com/bulloch.

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