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Phone could qualify you for a tax refund

By HELEN HUNTLEY
Published January 28, 2007

If you've got a telephone, chances are good that you qualify for at least $30 from Uncle Sam as your share of the great $15-billion telephone tax refund. Businesses and big cell phone users may be eligible for considerably more.

You can thank federal judges who ruled in several decisions that the 3 percent federal excise tax on long-distance phone service was illegal. Telecom service providers were told to stop charging it by Aug. 1, although the federal excise tax on local phone service still applies.

More than 146-million individuals and more than 14-million businesses and organizations are expected to get a refund. Low-income people, churches and others who don't normally file a tax return can share in the bounty by filing a special form.

For individuals, the simplest approach is to take a flat amount the IRS will give you-$30 to $60, depending on the number of exemptions on your return. You write the amount on one line of your tax return and you're done. The complicated, but possibly more rewarding way is to add up the taxes on 41 months worth of phone bills (those billed between March 1, 2003, and July 31, 2006) and file a separate form (Form 8913).

Who might want to go through 41 months worth of phone bills? A heavy phone user who keeps good records. The refund applies not just to the tax on traditional long-distance service, but to the tax applied to bundled service, such as all-in-one calling plans on cell phones, land lines and Voice over Internet Protocol. It doesn't matter whether you paid a flat monthly rate or a per-minute rate as long as local and long distance calls were lumped together.

If you have multiple phone lines, but are missing your old records, it may be worthwhile to contact your service providers and ask how much they charge for copies of past bills.

Of course most people are expected simply to take the flat amount the IRS offers - even tax preparers.

"I probably won't go back and research it; I just don't have the time to add all mine up," said Linda Walters, who has a tax and accounting service in Spring Hill.

If you are not required to file a return, you can claim the refund by filing Form 1040EZ-T. To claim actual taxes paid, you have to attach Form 8913.

For businesses and organizations, there is no flat refund amount. But businesses do have a choice of filing for actual taxes paid over the 41 months or of taking two monthly phone bills (April 2006 and September 2006) and using those to estimate taxes paid for the entire 41-month period.

The estimation method is expected to be more popular.

State and local telephone taxes are not part of the refund program.

[Last modified January 27, 2007, 22:21:26]