Long Distance Tax Ended, IRS to Issue Refunds

ET call home, now! The US Treasury Department has announced that the 3-percent federal excise tax on long-distance telephone service, in effect since 1898, has been rescinded. The Internal Revenue Service (IRS) will issue refunds of tax on long-distance service for the past three years. Taxpayers will be able to apply for refunds on their 2006 tax forms, to be filed in 2007.

In a press release announcing the end of what began as a “luxury tax” in the days when only wealthy Americans owned telephones, Treasury Secretary John Snow stated, "Today is a good day for American taxpayers; it marks the beginning of the end of an outdated, antiquated tax that has survived a century beyond its original purpose, and by now should have been ancient history.”

Clearly feeling the love, Snow went on to call on Congress to repeal the excise tax on local telephone service as well. “It's time to ‘disconnect’ this tax and put it on the permanent ‘do not call’ list,” he said.

About those tax refunds, the Treasury says…

• Refunds will be a part of 2006 tax returns filed in 2007.

• Refund claims will cover all excise tax paid on long-distance service over the last three years. Interest will be paid on refunds.

• The IRS is working on a simplified method for individuals to use to claim a refund on their 2006 tax returns.

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