Refunds for Long Distance Federal Excise Tax
According to a recent IRS ruling, individuals and businesses can file for a refund for federal excise taxes paid on long distance charges between March 1, 2003 and August 31, 2006. Industry experts say the value of these refunds could reach $15 billion.
Taxpayers can file for refunds on their 2006 tax returns for all excise taxes they have paid on long-distance service billed to them after February 28, 2003.
While individuals may have an easier time claiming this refund, the complexity of business telecom services could necessitate assistance from tax professionals.
The UHY Advisors Tax Group has established a methodology for efficiently reviewing telecom bills, which are often more complicated than you might expect:
- One client discovered it had 35 different carriers
- Another client receives monthly bills of 600 or more pages
- Companies often forget to include wireless bills in their refund calculations
Who is eligible for these refunds?
Companies and individuals who paid the 3% Federal Excise Tax on long distance services since March 1, 2003.
How are they collected?
There will be a line on the 2006 tax return forms; the refund will either apply against 2006 tax liability or part of a 2006 refund.
Who should investigate the potential refund?
Companies who spend more than $15,000 per month in long distance can receive the best ROI on this investigation. But it’s not as simple as it seems—many companies neglect to include wireless bills. And you cannot simply look at the general ledger entry for telephone services, since the refund only applies to the long distance portion of the bill.
How UHY Advisors can help
The firm has established a methodology for efficient review of invoices. A trained tax professional can determine whether a company is a good candidate for this refund, and recommend a process for collecting information from service providers.
For this type of engagement for a non-UHY Advisors tax client, the firm will provide a review package, which includes all back-up to support the claim for a refund.