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Thursday, May 25, 2006

Can You Hear Me Now? IRS to Refund $15 Billion of Telephone Taxes to Consumers

Treasury_5The Treasury Department and IRS announced this morning that after losing in five circuit courts of appeals, the Government is throwing in the towel and will no longer seek to enforce the 3% excise tax on long-distance telephone calls enacted during the Spanish-American War of 1898 as a "luxury" tax on wealthy Americans who owned telephones.  The IRS will will issue $15 billion in refunds to consumers for long-distance telephone service taxes paid over the past three years:

  • No immediate action is required by taxpayers.
  • Refunds will be a part of 2006 tax returns filed in 2007.
  • Refund claims will cover all excise tax paid on long-distance service over the last three years (time allowed given statute of limitations).
  • Interest will be paid on refunds.
  • The IRS is working on a simplified method for individuals to use to claim a refund on their 2006 tax returns.
  • Refunds will not include tax paid on local telephone service, which was not involved in the litigation.

Treasury and IRS:

Circuit Court Opinions:

Press reports:

http://taxprof.typepad.com/taxprof_blog/2006/05/irs_to_give_15_.html

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Listed below are links to weblogs that reference Can You Hear Me Now? IRS to Refund $15 Billion of Telephone Taxes to Consumers:

» Spanish-American War Now Over from It Shines For All
Or rather, the tax imposed to cover the war's costs has finally been lifted. The Treasury Department today announced (via TaxProf Blog)"it is conceding the legal dispute over the federal excise tax on long-distance telephone service. The Department of ... [Read More]

Tracked on May 25, 2006 10:49:03 AM

» Announcement: The Spanish-American War Is Over from Say Anything
It must be, anyway, because the government has decided to end the tax that was funding it. The Treasury Department and IRS announced this morning that after losing in five circuit courts of appeals, the Government is throwing in the... [Read More]

Tracked on May 25, 2006 11:30:35 AM

» The Spanish-American War Officially Ends! from Taxable Talk
And you thought that the Treaty of Paris (signed on December 10, 1898) ended the Spanish-American War. No! It ended today, ... [Read More]

Tracked on May 25, 2006 11:40:20 AM

» The Spanish-American War Officially Ends! from Taxable Talk
And you thought that the Treaty of Paris (signed on December 10, 1898) ended the Spanish-American War. No! It ended today, ... [Read More]

Tracked on May 25, 2006 12:41:38 PM

» IRS to Stop Collecting Telephone Tax from Tax Planning: U.S.
The Internal Revenue Service has agreed to stop collecting the federal excise tax assessed on long-distance telephone calls. The 3% federal excise tax has been the subject of numerous lawsuits, and the Treasury Department announced it has ordered the I... [Read More]

Tracked on May 25, 2006 2:47:49 PM

» FORGET THE MAINE! IRS THROWS IN TOWEL ON SPANISH AMERICAN WAR TELEPHONE EXCISE TAX from Roth & Company, P.C.
After a long series of court defeats, the Treasury today conceded defeat and will accept that the excise tax on... [Read More]

Tracked on May 25, 2006 5:25:46 PM

» A 108 year old "temporary tax" from respublica
The IRS lost in 5 circuit court of appeals and will now be refunding $15 billion to customers for the past 3 years of long distance telephone service. Back in 1898, yes, 1898, the government enacted a 3% excise tax [Read More]

Tracked on May 25, 2006 5:42:38 PM

» Another Example of Government Failure from Anchor Rising
Some news events do not require commentary. This is one such news event. Paul Caron, the Charles Hartsock Professor of Law at the University of Cincinnati College of Law writes about how the IRS to Refund $15 Billion of Telephone... [Read More]

Tracked on Jun 16, 2006 8:56:04 PM

» Damn those lobbyists! from Striderweb
Obviously the corrupt lobbyists are at it again, forcing the government to give yet another tax break to the rich : From TaxProf Blog Can You Hear Me Now? IRS to Refund $15 Billion of Telephone Taxes to Consumers: The Treasury Department and IR... [Read More]

Tracked on Jul 24, 2006 6:59:41 PM

Comments

As Butt-head once noted to Beavis, "Cool!"

Posted by: Will Collier | May 25, 2006 10:11:47 AM

And who, pray tell, has a clue how much the phone co./gov't might have accumulated from this over the past 3 years?

Will the FCC require all long distance providers to send out statements prior to January 31st, 2007 detailing how much excise taxes were taken and that the customer should apply for on their 1040Telco?

Posted by: Jeff | May 25, 2006 12:44:53 PM

How will they determine how much each person will get back? Will each person have to submit their phone records for the past few years or will they use the information collected by the NSA?

Posted by: Jim | May 25, 2006 1:59:51 PM

We should thank not the IRS, but the citizens' advocacy groups and anti-war groups that circulated information telling customers how legally to get out of paying the taxes. By making the IRS take up the burden of collection instead of the government forcing phone companies to do it, they've seen the error of their ways. Maybe we can get rid of the rest of these useless taxes, too. When there's no money for war, there'll BE no war.

Posted by: Victor deCastart | May 25, 2006 4:41:55 PM


well gee, it's only been 108 years.Shows you
the danger of agreeing to be taxed for any-
thing

Posted by: steve | May 25, 2006 5:10:22 PM

The big question is whether there are any honest legislators among our 535 brave souls in Congress willing to waive the statute of limitations on this. Anybody...? Bueller?

Posted by: TM Lutas | May 25, 2006 6:59:51 PM

What's going on here? Run the figures:

$15 billion dollars for three years. That's $5b per year. There are 100 million families in the US, so that's $50/family/year. Since it's a three percent tax, that implies the average family spends 50/3% = $1700 on long distance phone calls per year. No way.

Someone should figure out who this money's really going to. My guess is that 98%+ of these billions will go to corporations with call centers, telemarketers, etc.

Posted by: Alexei | May 25, 2006 8:18:13 PM

Actually, most large call centers dont use long distance, to save $ they route everything VOIP to India.

Posted by: topherhov | May 25, 2006 10:38:11 PM

the average cell phone plan is about $45 a month. Over three years this is 1620 * 3% is about $48, close to your $50. I know i've spend $1880 on cell phones in the past three years.

Posted by: william | May 25, 2006 10:48:13 PM

hmm, william, that gets you up to 5B over 3 years, not 15B. Also, Local phone service isn't covered (and wasn't taxed) only Long Distance; so cell phone plans might not be applicable (or only partially so).

Posted by: Gekkobear | May 26, 2006 2:46:13 PM

How would they figure it out if I had the Verizon Freedom Plan when all the calls were under one flat rate? And I've moved twice since then. How do they find us?

Posted by: Leslie | May 27, 2006 11:09:54 AM

Cell phone plans do include federal excise taxes.

Keep in mind that most of the rebate/refunds will go to small, medium, large businesses who use a ton of LD.

I am working on a client project and you must also consider excise taxes billed via ISP's, hotspots, Hotels, etc.

Businesses will have to document their refund request.

Individuals will either claim a "to be determined fixed amount", or document more.

For some people, the fixed or safe harbor amount will be more or less than they actually are owed.

What really blows in this whol thing is that the taxed should have ended over 100 years ago. Congress has been wasting this money for DECADES, and reluctantly decided to stop milking this cash cow!

Posted by: Voice of Reason | Jun 28, 2006 12:40:05 PM

This is just another point of proof on how inefficient our government is. They never seem to END any tax that they approve until someone brighter than all members of congress, of both houses, points out this HUGE mistake. I am of the mind, we could do much better for us citizens to have an ALL NEW congress electted to start from scratch. Couldn't do too much worse.

Posted by: Janice S. | Aug 31, 2006 9:41:56 PM