Monday, April 28, 2008

IRS and Telephone tax refund

• What is telephone tax refund?

Think the telephone-tax refund as a payment that occurs only once on a person’s previous year’s federal IT return. The refund returns all the federal excise tax collected on long-distance tele-services. Even bundled services come within the jurisdictions of this refund.

• Why is the government refunding these taxes?

The decisions of the federal court can be held responsible for this change; certain revisions made of recent by the federal court excluded this tax from the jurisdictions of long-distance telephone services as well as from the telephone services offering a flat rate or even those that come with Internet and VoIP. However, the local services are not included into the refund plan.

• What is the procedure to get the tele-tax refund?

For filing an amended tele-tax return, a special short form is to be filled first; it’s the Form 1040EZ-T. Any individual in the low-income group as well as senior citizens can opt for this tax return on telephone bills paid till the previous year. The process is as follows:

• File Form 1040X. Requesting for the refund of the federal telephone excise tax, do the following:

 Fill in the top portion of the form through line B,
 Write the amount to be requested on Line 15 and add “FTET” to the dotted line below,
 In Part II, the Explanation of Changes, write “Federal Telephone Excise Tax”,
 Add your signature and send it to the IRS Processing Center of your State. You can find the address on the Form’s Instruction page itself.

One point to be noted is that if you are requesting for a refund of the paid telephone excise taxes than that of the standard amount, you also need to fill Form 8913, Credit for Federal Telephone Excise Tax Paid. Multiple changes to 2006-tax return are to be followed by filling the form according to the Instructions listed.

The request for standard amount is optional and the easiest way for requesting a refund. A family of four including two dependant children can be eligible for a maximum refund of $60. If you do not want to use the standard amount, then you must figure the refund with the original amount of tax that you’ve paid. Sometimes it results to a much bigger refund. Fill up the Form 8913 and attach the amended returns, if you are looking for this option. It is not necessary to show all the bills for the entire 41-month period, i.e. from March 2003 to July 2006, but you must have sufficient records to back up the refund amount that you are requesting.

Since the business units and non-profit organizations cannot avail the standard amount, they must fill out Form 8913 and request their refund basing on their actual tax paid. This form needs to be attached with Form 1120, 1065, 11205 or 1041 for business organizations. Non Profit Organizations should attach this same form with Form 990-T.

• Who is eligible for telephone tax refund?

Generally, any person or a business unit or a non-profit organization that had paid the tax for long distance calls billed in between 28th February, 2003 to 1st August, 2006 are eligible to request for the refund. It is open to everyone who cleared taxes for landline, VOIP (Voice Over Internet Protocol), or wireless services. But then again, to hear it from the horse’s mouth, no place can be better than Respond; find the right people here who can guide you throughout the process to earn you back the lost dollars, just like the other three million did.

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