There is a New Refund: Telephone Excise Tax

The New Telephone Excise Tax Refund is a one-time refund of telephone excise taxes paid by individuals on telephone bills for long distance or bundled services. The IRS estimates that over 150 million individuals-those persons who paid the telephone excise tax between February 28, 2003, and July 31, 2006-are affected by this refund. Traditional landlines, as well as cell phones and even Internet phone packages, can qualify for this refund.

As for determining the amount of the Telephone Excise Tax Refund, it can be calculated in one of two ways. The taxpayer with copies of all telephone bills for the time period in question can identify the exact amount of telephone excise tax he or she paid, thus claiming the actual amount and interest (which must then be claimed as income). Or, the taxpayer can use the standard IRS guidelines, which are based on the number of exemptions the taxpayer claims (and which generate no interest to be claimed as income):

$30 for one exemption;

$40 for two exemptions;

$50 for three exemptions; and

$60 for four or more exemptions.

Tax practitioners should look for a newly added line on the federal income tax return, in the payment section, where the Telephone Excise Tax Refund will be entered and added to other payments or withholdings the taxpayer may have had for 2006.

Al Caicedo, CSA Asset Preservation Consultant Macomb County Money Expert

CKS Summit Group, Inc. 37040 Garfield, Suite C-3 Clinton Township, MI 48036 Phone: 586-286-5820 Fax: 586-286-5827 E-mail: cks@summitgp.com Web: www.summitgp.com