$10 billion tax refund for long distance phone

By Greg Go on 25 January 2007 (Updated 21 August 2007) 2 comments

If you paid for long distance phone service in the last 3 years, you are eligible for a refund of the U.S. federal taxes paid on that service. The government estimates that up to $10 billion will be refunded to consumers. (Details based on this IRS document.)

Recent court decisions have declared that the taxes should not have applied to long distance service as it is billed today. Refunds are offered for taxes paid on long distance service between February 28, 2003 and August 1, 2006.

The refund is only for long distance service, but if your phone bill bundles local and long distance (and/or other services), you are eligible. This refund is available for landline, wireless/cellular, and even VoIP/Internet calling plans!

To make the refund calculation easier, the IRS has created a tiered standard payout system based on historical data:

  • 1 exemption - $30
  • 2 exemptions - $40
  • 3 exemptions - $50
  • 4 exemptions or more - $60

To claim the standard refund, you fill out one additional line on your Form 1040, 1040A, 1040NR or 1040EZ. If you don't need to file a return, you can still claim just the standard refund using the 1040EZ-T form.

However, if you want to determine exactly what you are owed and get paid interest on those monies, fill out and attach Form 8913 to your tax return. (And you better have those old phone bills to back up your claim.)

The IRS recommends using the standard refund amount rather than gathering all those old phone bills:

The standard amount is based on actual telephone usage data, and the amount applicable to a family or other household reflects taxes paid on long-distance or bundled service by similarly sized families or households. Using this amount may be the easiest way for taxpayers to get their refund and avoid gathering 41 months of old phone records.

More information and details are available at the IRS website.

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Will Chen's picture

we get some money back from those mysterious "taxes" and "fees" we pay on our phone bill.  I heard we've only recently stopped paying utility taxes earmarked to pay for the Spanish American War. 

Tannaz Sassooni's picture

I can't wait for my 10 billion dollar refund!  Awesome!  (No seriously, this is great and I will share it with my tax guy.  Every dollar counts.)