So many taxpayers are missing out on the one-time telephone excise tax refund, the government is getting a $30 to $60 million windfall.
Among tax returns filed thus far this year, more than 10 million tax payers did not request the one-time refund, according to the Internal Revenue Service (IRS).
Others are requesting exorbitant refund amounts and still others are incorrectly filing duplicate requests.
To make the refund easier to figure, the government established a standard refund amount, based on personal exemptions, ranging from $30 to $60, but if taxpayers kept all their bills they can request the actual amount of excise tax paid.
In any event, taxpayers failing to ask for the refund are granting the government a pass on giving back $30 to $60 million -- so far.
For the standard amount, taxpayers only have to fill out one line on their tax return and they don't need to present proof to the IRS.
It's a small refund for an individual taxpayer or household, but the amount is enough to pay a monthly cable bill, a small phone bill, a homeowner's insurance premium and a myriad other monthly household bills.
"Many taxpayers are overlooking this special refund and the chance to get a bigger refund," said IRS Commissioner Mark W. Everson.
"We encourage taxpayers to spend a few extra minutes reviewing their tax return to make sure they are making an accurate request. A little extra time can mean a bigger refund check," he added in a prepared statement.
Here's the scoop.
Uncle Sam stopped holding his hat out for the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today.
Federal officials authorized a one-time refund of the federal excise tax collected on service billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006. The tax continues to apply to local-only phone service.
Federal long-distance excise taxes paid on land lines cell phones, fax and Voice over Internet Protocol (VoIP) service qualify for the refund.
Bending over backwards to make the refund easier to figure, the government established a standard refund amount, but those who have their phone bills can request the actual amount of excise tax paid.
- For those electing the standard amount complete the line, labeled, "Credit for federal telephone excise tax paid" on your tax return.
The standard amount approximates the eligible amount for most individual taxpayers and tax return reviewers are flagging returns with requests for high telephone excise tax refund requests.
- Form 1040EZ-T, is designed exclusively for requesting the telephone-tax refund for people who don’t need to file a regular income-tax return.
- For taxpayers tallying the actual amount the refund should be based on the three-percent federal tax paid, not the total phone bill. Do not count tax paid on local-only service. You must have the phone bills or other records to support the amount you are requesting should the IRS question the amount of the refund requested.
For a refund based on the actual amount paid, use Form 8913, "Credit for Federal Telephone Excise Tax Paid" with your tax return.
Among the tax returns filed through Feb. 16, 2007, half the 10 million taxpayers who did not request the telephone tax refund had their return prepared by a professional tax preparer.
"We are surprised how many tax preparers are overlooking the telephone tax refund," Everson said.
"We want all taxpayers entitled to this refund to get it, whether they are using a tax preparer or doing the return themselves," he added.
There are methods to assure you get the refund, according to the IRS.
- File electronically. Electronic-filing software flags often overlooked tax breaks and helps you figure them accurately and report them properly. If you use a professional tax preparer, ask that person to e-file your return.
- E-file for free. If your income is $52,000 or less, use the Free File link on IRS.gov to connect to a private-sector company offering free e-file services.
- Choose direct deposit. Whether you file electronically or on paper, you can get your refund at least a week sooner by having it deposited directly into your checking or savings account.
- Don't make duplicate requests. If you file a regular income-tax return, do not also file Form 1040EZ-T. The IRS also says to avoid tax preparers who claim that many phone customers can get hundreds of dollars or more back under this program.
- If you forgot to request the refund you may file Form 1040X to amend your tax return.
More information is available Telephone Excise Tax Refund section highlighted on the IRS.gov's home page.
