The federal government stopped collecting the long-distance excise tax last August after several federal court decisions ruled the tax does not apply to long-distance service as it is billed today. Federal officials authorized a one-time refund of the federal excise tax collected on service billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006. The tax continues to apply to local-only phone service.
To make the refund easier to figure, the federal government established a standard refund amount, based on personal exemptions, ranging from $30 to $60. If taxpayers have phone bills and other records, they can request the actual amount of excise tax paid. Taxpayers only have to fill out one line on their return, and they don’t need to present proof to the IRS.
If you paid the tax and haven’t filed your return, here are some tips to help you figure the refund correctly:
• File electronically. Electronic-filing software flags often overlooked tax breaks and helps you figure them accurately and report them properly. If you use a professional tax preparer, ask that person to e-file your return.
• Consider using the standard-refund amount for the telephone-tax refund. Although using the standard amount is optional, the amount is easy to figure and approximates the eligible amount for most individual taxpayers. You only have to fill out one line on your return, and you don’t need to present proof to the IRS. The standard amount, ranging from $30 to $60, is based on the number of exemptions you can claim on your return.
• If you paid more than the standard amount, you may figure your refund using the actual amount of tax shown on your phone bills and other records. Base your refund request on the three-percent federal tax paid, not the total phone bill. Do not count tax paid on local-only service. You must have the phone bills or other records adequate to support the amount you are requesting. These documents should not be sent along with the refund request, but should be retained in case the IRS questions the amount requested.
• If you normally do not file a return, get a copy of form 1040EZ-T in order to receive the excise tax refund. This form is only for people who are not required to and do not file an individual income tax return.
• Stay away from tax preparers who falsely claim that many, if not most, phone customers can get hundreds of dollars or more back under this program.
• Use the telephone excise tax refund section on the front page of IRS.gov. You can download forms, find answers to frequently-asked questions, and link to participating Free File partners.
The PSC is committed to making sure that Florida's consumers receive their electric, natural gas, telephone, water, and wastewater services in a safe, affordable, and reliable manner. The PSC exercises regulatory authority over utilities in the areas of rate base/economic regulation; competitive market oversight; and monitoring of safety, reliability, and service.
For additional information, visit www.floridapsc.com