IRS Issues Rules for Telephone Excise Tax Refunds on 2006 Returns

The IRS yesterday issued Notice 2007-11, 2007-4 I.R.B. 1, which provides comprehensive guidance on how individuals and businesses can obtain refunds and credits on their 2006 returns of the long-distance telephone excise tax imposed by § 4251:

• Individuals can either claim a standard amount ($30 (single) - $60 (married with two or more children) on Form 1040, or file a claim for the actual excise taxes paid between 3/1/03 - 7/31/06 on Form 8913, Credit for Federal Telephone Excise Tax Paid.
• Businesses, Tax-Exempt Organizations, and Individuals Filing Schedules C, E, or F with Gross Receipts in Excess of $25,000 either may file a claim based on the actual excise tax paid for the past 41 months or may use a special formula to figure their refund based on two months of bills.

The IRS agreed to stop collecting the tax after several cases held the continued collection of the tax to be illegal:

• Am. Bankers Ins. Group v. United States, 408 F.3d 1328 (11th Cir. 2005)
• OfficeMax, Inc. v. United States, 428 F.3d 583 (6th Cir. 2005)
• Nat’l R.R. Passenger Corp. v. United States, 431 F.3d 374 (D.C. Cir. 2005)
• Fortis v. United States, 2006 U.S. App. LEXIS 10749 (2d Cir. Apr. 27, 2006)
• Reese Bros. v. United States, 2006 U.S. App. LEXIS 11468 (3d Cir. May 9, 2006)

For more information on the IRS web site, see:

• Telephone Excise Tax Refund
• IR-2006-179, Businesses and Tax-Exempts Can Use Formula for Telephone Tax Refund
• IR-2006-137, IRS Announces Standard Amounts for Telephone Tax Refunds
• IR-2006-82, Government to Stop Collecting Long-Distance Telephone Tax
• JS-4287, Treasury Announces End to Long-Distance Telephone Excise Tax
• Notice 2006-50, 2006-25 I.R.B. 1141