Credit Where Credit Is Due
Claim: Special one-time federal excise tax credit in 2006 rebates tax overpayment on phone bills.
Status: True
Origins: In November 2006 inboxes began filling with forwards about a tax credit available in 2006 for overpayment of a federal tax charged on phone calls. For once, an Internet forward is on the up-and-up; there really is such a credit available to taxpayers filing their federal 2006 returns (which most people will submit to the IRS in 2007).
The tax in question, the Federal Excise Tax, was first imposed in 1898 to help fund the Spanish-American War. One of the things it taxed was telephone service, which at that time was something only the very wealthy had, so this levy served as a luxury tax charged only to those who could easily afford it.
The war ended and the bills for it were settled up, but the tax stayed in place. Over time, as telephone use spread to the masses, what had begun as a charge against the very wealthy for a frippery they could easily have done without became a charge against just about everyone for a service that had come to be regarded as vital.
The tax was levied against charges accruing to long distance calls, which until recently were primarily determined by a formula based on call length and the distance between conversing parties. That mode of establishing the price of calls has mostly been supplanted by the practice of basing long distance charges on minutes alone, with no regard to the physical distance the calls travel. Opponents to the tax asserted that that shift made the tax invalid, and the courts finally agreed with them.
In May 2006, after losing a series of federal court cases, the Internal Revenue Service said it would no longer collect the 3 percent tax and ordered telephone companies to stop charging it by 1 August 2006.
Taxpayers are eligible to claim a refund of the long-distance tax billed for any phone service (cell, fax, computer or land line) in the 41-month period from 28 February 2003 through 31 July 2006.
On its web site, the IRS explains the refund and how to apply for it. Additional information can be found by following the links offered on its Telephone Excise Tax page.
In a nutshell, rather than ask everyone to comb through their phone bills for that 41-month period to add up all the tax collected and then submit claims for those amounts, the IRS will offer taxpayers standard refunds of between $30 and $60 (the amount depends on the composition of the household) that they can apply for simply by entering the refund amount appropriate to them on a particular line on their 2006 tax returns. Those who wish to go it the long way by adding everything up to emerge with the precise figure owed them may do so, but in their case applying for the refund will require them to complete and file Form 8913 with their returns.
This is a one-time tax credit, so those who fail to file for it on their 2006 returns will likely lose their shot at claiming it. It therefore makes very good sense to let your friends, neighbors, and co-workers know about this opportunity, lest they otherwise miss it. The only mystery in all this lies in the question of why the Internet drums only started to beat about this in November 2006, when the refund was announced in May 2006, a full six months earlier.
Claim: Special one-time federal excise tax credit in 2006 rebates tax overpayment on phone bills.
Status: True
Origins: In November 2006 inboxes began filling with forwards about a tax credit available in 2006 for overpayment of a federal tax charged on phone calls. For once, an Internet forward is on the up-and-up; there really is such a credit available to taxpayers filing their federal 2006 returns (which most people will submit to the IRS in 2007).
The tax in question, the Federal Excise Tax, was first imposed in 1898 to help fund the Spanish-American War. One of the things it taxed was telephone service, which at that time was something only the very wealthy had, so this levy served as a luxury tax charged only to those who could easily afford it.
The war ended and the bills for it were settled up, but the tax stayed in place. Over time, as telephone use spread to the masses, what had begun as a charge against the very wealthy for a frippery they could easily have done without became a charge against just about everyone for a service that had come to be regarded as vital.
The tax was levied against charges accruing to long distance calls, which until recently were primarily determined by a formula based on call length and the distance between conversing parties. That mode of establishing the price of calls has mostly been supplanted by the practice of basing long distance charges on minutes alone, with no regard to the physical distance the calls travel. Opponents to the tax asserted that that shift made the tax invalid, and the courts finally agreed with them.
In May 2006, after losing a series of federal court cases, the Internal Revenue Service said it would no longer collect the 3 percent tax and ordered telephone companies to stop charging it by 1 August 2006.
Taxpayers are eligible to claim a refund of the long-distance tax billed for any phone service (cell, fax, computer or land line) in the 41-month period from 28 February 2003 through 31 July 2006.
On its web site, the IRS explains the refund and how to apply for it. Additional information can be found by following the links offered on its Telephone Excise Tax page.
In a nutshell, rather than ask everyone to comb through their phone bills for that 41-month period to add up all the tax collected and then submit claims for those amounts, the IRS will offer taxpayers standard refunds of between $30 and $60 (the amount depends on the composition of the household) that they can apply for simply by entering the refund amount appropriate to them on a particular line on their 2006 tax returns. Those who wish to go it the long way by adding everything up to emerge with the precise figure owed them may do so, but in their case applying for the refund will require them to complete and file Form 8913 with their returns.
This is a one-time tax credit, so those who fail to file for it on their 2006 returns will likely lose their shot at claiming it. It therefore makes very good sense to let your friends, neighbors, and co-workers know about this opportunity, lest they otherwise miss it. The only mystery in all this lies in the question of why the Internet drums only started to beat about this in November 2006, when the refund was announced in May 2006, a full six months earlier.
