Serving Boone, Blowing Rock, Banner Elk, and other towns of the North Carolina High Country | Founded 05-05-05

January 18, 2007 issue

Claim a One-Time-Only Telephone Tax Credit

Story by Kathleen McFadden

North Carolina Attorney General Roy Cooper has released a consumer alert about a one-time opportunity for getting a little extra cash back on your 2006 federal tax return.

Consumers who pay for long distance or bundled telephone service can claim a one-time tax refund this year. Because of recent court decisions, the refund is available to anyone who paid federal excise taxes on long-distance or bundled landline, wireless or Voice over Internet Protocol (VoIP) service. The telephone tax refund will be treated as a one-time payment on your 2006 return and will either reduce the amount you owe or be added to your refund.

Who qualifies for the refund?

Any consumer, business or nonprofit organization that paid the tax for long-distance or bundled service billed after February 28, 2003 and before August 1, 2006 is eligible to request the refund.

What is bundled service?

The IRS classifies bundled service as local and long-distance service provided under a single plan that does not state the charge for the local telephone service separately from other services. Bundled service plans include, for example, Voice over Internet Protocol (VoIP) service and landline and wireless service plans that provide both local and long-distance service for a flat monthly fee.

How much can you get back?

You can file for a standard refund of between $30 and $60 without having to gather your old phone bills. For individuals, the amount you’ll get is based on the number of exemptions you claim. For example, a married couple filing a joint return with two dependant children can get the maximum amount of $60. If you want to get back the actual amount of tax you paid, you’ll need to gather your old telephone bills from February 28, 2003 through August 1, 2006. Businesses and nonprofits cannot claim the standard refund and will need to file for the actual amount of tax they paid.

How do you claim the refund?

Individuals: If you want to claim the standard amount, you only need to fill out one additional line on your regular income tax return. People who don’t otherwise need to file a return can use form 1040EZ-T to choose the standard amount. Individuals who want to claim the actual amount of tax they paid can fill out Form 8913 and attach it to their regular returns.

Businesses and nonprofits: Businesses and nonprofits must fill out Form 8913 and base their refund requests on the actual amount of tax they paid. Businesses should attach this form to the income tax returns they normally file. Nonprofits, including churches, charities and other tax-exempt organizations, should attach it to Form 990-T.

Where can you get more information?

Instructions for requesting this special refund will be included with your tax forms and are also available on the IRS website at www.irs.gov. If you decide to figure the actual amount of tax you paid rather than claim the standard refund, you’ll need copies of your phone bills. Telephone companies may charge for replacement copies of past bills, so check the company’s Web site for more information before you request replacement copies.