Thursday, May 25, 2006
The 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: