Claim: Special one-time federal excise tax credit in 2006 rebates tax overpayment on phone bills.
Example: [Collected via e-mail, 2006]
SPECIAL ONE TIME TAX CREDIT ON YOUR 2006 TAX RETURN
When it comes time to prepare and file your 2006 tax return, make sure you don’t overlook the “federal excise tax refund credit.” You claim the credit on
What is this all about? Well the federal excise tax has been charged to you on your phone bill for years. It is an old tax that was assessed on your toll calls based on how far the call was being made and how much time you talked on that call. When phone companies began to offer flat fee phone service, challenges to the excise tax ended up in federal courts in several districts of the country. The challenges pointed out that flat fee/rate phone service had nothing to do with the distance and the length of the phone call. Therefore, the excise tax should/could not be assessed.
The IRS has now conceded this argument. Phone companies have been given notice to stop assessing the federal excise tax as of
But the challengers of the old law also demanded restitution. So the IRS has announced that a one time credit will be available when you and I file our 2006 tax return as I explained above. However, the IRS also established limits on how BIG a credit you can get. Here ‘s how it works.
If you file your return as a single person with just you as a dependent, you get to claim a $30 credit on
If you file with a child or a parent as your dependent, you claim $40.
If you file your return as a married couple with no children, you claim $40.
If you file as married with children, you claim $50 if one child, $60 if two children.
In all cases, the most you get to claim is $60 – UNLESS you have all your phone bills starting AFTER
Now if you have your actual phone bills and come up with an ACTUAL TAX AMOUNT, you cannot use
Individuals using the special from 1040EZ-T will have to attach this form 8913 also.
One final point – this credit is a refundable credit. That means you get this money, no matter how your tax return works out. If you would end up owing the IRS a balance, the refund will reduce that balance you owe. If you end up getting a refund, the credit will be added and you get a bigger refund by that $30 to $60, depending on how many dependents are on your return.
Feel free to pass this on or make copies for family and friends who don’t have computers.
Origins: In November 2006, the snopes.com inbox 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
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 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
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
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
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
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
Barbara “in one half year and out the other, I guess” Mikkelson
Last updated: 27 May 2011
 | Sources: |
Day, Kathleen. “Call It the Teddy Roosevelt Refund.” The Washington Post. 1 September 2006 (p. D3). CNNMoney.com. “Treasury: Telephone Tax Refund for Everyone.” 26 May 2006. Reuters. “U.S. to Repeal Long-Distance Phone Tax.” The New York Times. 25 May 2006.