New tax laws create refund

Filing for taxes may be tedious, but knowing one detail when filing this year may pay off.

Taxpayers filing for 2006 are eligible for a refund. The refund comes from a repealed 3 percent federal excise tax on long-distance telephone services.

According to the Internal Revenue Service Web site, federal excise taxes paid on land lines, cell phones, fax and Voice over the Internet Protocol qualify.

“Since 91 percent of American (working) adults file tax returns, this is an efficient way to get the refund,” said Aric Schreiner, managing partner for Columbia CPA Group.

The IRS ordered phone companies to stop collecting taxes for long-distance services on Aug. 1, 2006, after several court decisions ruled in favor of tax opponents, such as Ford Motor Co. and Amtrak. The refund is for a 41-month period spanning from March 1, 2003, to Aug. 1, 2006. To avoid digging through 41 months worth of phone bills, the IRS created a standard refund between $30 and $60 to simplify claims.

Aimee Cole-Steele, an area manager for Jackson Hewitt tax service, said a person can claim the maximum amount based on the number of exemptions claimed over the 41 months.

“It’s $40 for two, $50 for three, and $60 for at least four,” she said.

Schreiner said if someone uses tax-preparation software, the software will automatically give the refund based on the number of exemptions claimed. Schreiner said that people who are unaware of the refund may miss it if they are filing taxes on paper.

He said about half of his clients so far were not aware of the refund.

When filing for the optional standard amount, taxpayers can go to Line 71 on Form 1040, Line 42 on Form 1040A, or Line 9 on Form 1040EZ.

To receive refund requests based on the actual amount of taxes paid, one must fill out Form 8913 and attach it to their 2006 income tax return.

Schreiner said he advises taxpayers to file for the standard amount since the actual refund may not outweigh the time and money spent filling out the paperwork.

Form 8913 can be found for free on irs.gov through the Free File link.

Businesses and nonprofits may also apply for the credit, but do not have the same standard amount. Instead, a formula may be used based on two months worth of phone bills — April 2006 and September 2006.

Steele said people who are not required to have their taxes filed, such as retirees and people who receive Social Security benefits, can still receive a refund for federal excise taxes paid by filing a 1040EZ-T form. Those not filing this year can still get assistance for a refund of the excise tax.

People can also go to irs.gov and file a form electronically for free. Either the standard amount or the maximum amount may apply. To receive the maximum amount, Form 8913 must be attached as well.

Introduced in 1898, the tax was originally created to finance the Spanish-American War. Since the tax was based on the distance and duration of phone calls, opponents claimed the tax to be invalid, since people often pay for long-distance calls for a flat fee.