What is the Telephone Tax Refund?

Several United States (US) federal court decisions prompted the Internal Revenue Service (IRS) to offer refunds on taxes that were collected on any telephone long-distance service and bundled services from 28 February 2003 to 1 August 2006. The telephone tax refund was intended to be a one-time payment on the 2006 tax return. Individuals, businesses, and non-profit organizations can claim the telephone tax refund. The refund is available to those who used wireless phones, landline phones, and voice over Internet protocol (VOIP). Taxpayers that did not file for the telephone excise tax refund in 2006 may still be able to file an amendment to their 2006 tax returns to receive a refund.

Telephone companies usually offer different types of services. Some charge separately for local and long-distance services; others bundle their services. A bundled service typically does not differentiate between local and long distance phone calls. Users are charged a flat rate with charges added if calls exceed the allowable limits.

Prepaid telephone cards and prepaid cell phones are usually not covered by the telephone tax refund unless additional minutes were bought directly from a phone company. Only the additional minutes may be used to request a refund. In addition, calls made outside the US or in US territories usually are not be covered. The IRS does not collect taxes on calls made outside of the 50 states and the District of Columbia. An exception would be if a person purchased phone service from a US-based telephone company and the company collected taxes on its long-distance service or bundled service.

The IRS has established standardized refunds for individuals. A standard telephone tax refund is based on the number of exceptions that a person took in 2006. For example, individuals who claimed one exemption are entitled to a $30 US dollars (USD) refund; individuals who took two exemptions can receive $40 USD back from the IRS; individuals with three exemptions are entitled to $50 USD; while people with four or more exemptions can receive $60 USD. If individuals kept their phone bills from the appropriate 2003 to 2006 period, these people may be entitled to a larger refund. In order to claim the larger refund, the phone bills must be itemized.

Only individuals are allowed to file telephone tax refund claims for standard refunds. Businesses and non-profit organizations must base their telephone tax refund claims on their actual telephone billing records. Alternatively, businesses and non-profits can base their refund requests on their April and September 2006 phone bills. Individuals and organizations that have not claimed the telephone tax refund can find filing procedures and the appropriate forms by visiting the IRS website.