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IRS Sets Up Phone-Tax Refund

September 01, 2006|From the Associated Press

WASHINGTON — Consumers can claim a standard $30 to $60 refund next year for a tax on long-distance telephone calls that the government declared invalid, the Internal Revenue Service announced Thursday.

Telephone customers had been paying the 3% federal excise tax on local and long-distance service. The government stopped collecting the tax on long-distance calls in August after businesses repeatedly fought the tax in court and won.

Consumers will be able to use their 2006 tax returns to claim a refund on the taxes paid since March 2003.

The standard refund starts at $30 and increases by $10 for each additional exemption claimed on a tax return, up to $60. A married couple with two dependent children, for example, could claim a $60 refund.

The IRS will add a line to the 2006 tax returns mailed next spring enabling individuals to claim the refund. The agency will also create a form for people not otherwise required to file tax returns.

"These amounts save taxpayers from locating 41 months of old phone bills and analyzing these bills to determine the taxes paid," IRS Commissioner Mark Everson said. "We believe the standard amounts are both reasonable and fair."

The IRS said that it based the refund amounts on phone usage data, and that the standard amounts reflect averages for households of different sizes.

Individuals do not have to use the standard amount. Consumers who have their old phone bills can instead add up the taxes they paid from March 2003 to July 2006 and apply for a refund.

The Treasury Department has said it expects to return $13 billion to consumers, including businesses and other organizations.

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