Companies Discover It Isn't Easy to Claim Phone-Tax Refunds

COMPANIES DISCOVER IT ISN'T EASY TO CLAIM PHONE-TAX REFUNDS
[SOURCE: Wall Street Journal, AUTHOR: Robert Guy Matthews robertguy.matthews@wsj.com]
The Internal Revenue Service plans to refund $13 billion in phone taxes to businesses and consumers following court rulings that the taxes were illegal. But getting more than a nominal refund could cost a bundle because customers will have to search through old bills to calculate how much they paid in the tax. Sean Kevelighan, spokesman for economic and tax policy for the Treasury Department, says the government recognizes that recovering old bills is a tedious process but that it is necessary to prevent fraud. The Treasury Department, after a series of court rulings against the government, announced in May that it would stop collecting the 3% excise tax on long-distance telephone service and refund billions of dollars to 25 million businesses and 150 million individuals -- virtually all the businesses and individuals who filed tax returns during the period in question. Although the tax dates back to the Spanish-American War, the agency said, under the statute of limitations, it would refund only taxes imposed starting March 2003 through mid-2006. For consumers, getting the refund will be fairly simple. The IRS is likely to set an amount -- probably from $30 to $70, depending on usage and the number of telephones in the household -- that taxpayers can get without documentation, says David R. Williams, an IRS official overseeing the refund effort. Mr. Williams says the IRS's initial calculations show that most consumers have shelled out less than $70 in telephone taxes since 2003. The IRS and the phone companies are discussing how to come up with an easiest way for them to calculate the average refunds that households are due. Those and other details are still being worked out, he says.
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