Course, this is old news, in fact, it was pubished in May of 2006. Guess I didn't realize they were even collecting a federal excise tax on my long distance telephone bill. According to the article this tax collection began in 1898 and 3% is the current rate imposed.
The best part of this news is that we can claim a refund on our 2006 tax returns! And better yet, they will pay interest. Does that mean you have to find all of your phone bills from Feb 28, 2003 through Aug 1, 2006?
According to the IRS they plan to make it easy and straightforward for taxpayers. To find that information I had to download Notice 2006-50. After reading through 14 pages, I finally found what I was looking for on pages 8 and 9.
Here's the deal.
- You can go through all your phone records and report it on your 2006 tax return on the lines provided.
- Don't want to find your records. Take the Safe Harbor amount.
Okay, so you get the refund and you get interest. Guess what? You have to claim that interest on your 2007 tax return because you will have received it in the 2007 tax year. And the credit refund cannot be applied to your estimated tax payments, providing you are required to make such payments.
What if you don't file a tax return? Here's what they say: Individual taxpayers may request a credit or refund of federal excise taxes paid on nontaxable service only on their 2006 Form 1040, 1040A, or 1040-EZ, Individual Income Tax Return. Individuals who are not otherwise required to file a federal income tax return must nevertheless file Form 1040EZ-T to request the credit or refund.
Update - August 31, 2006 The latest news on how this will be handled by the IRS, using standard amounts. The standard amounts are based on the total number of exemptions claimed on the 2006 federal income tax return. The standard amounts are $30 for a person filing a return with one exemption, $40 for two exemptions, $50 for three exemptions and $60 for four or more exemptions. For example, a married couple filing a joint return with two dependent children (for a total of four exemptions) will be eligible for the maximum standard amount of $60. So there it is. If by chance, you do have all your phone bill records and the tax amounts are more than the standard allotment being given, you will be able to enter that amount into your 2006 tax return, just be sure that you have the paperwork to back it up. If anymore information becomes available, I'll post it here as an update. But wait......I have a question. Back in 2003 my income tax return had 4 dependents, and then 3 dependents and now 2 dependents. Does that mean I can only claim 2 because that's all I have for tax year 2006. That doesn't seem fair, when I had a family of four in 2003. Ugh....my research is not over yet.
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