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Dealers Can Request a Telephone Excise Tax Refund

Apr 13, 2007

The three-percent Federal Excise Tax on virtually all phone calls dates back nearly 110 years, when the U.S. Government needed money to help pay for the Spanish-American War. While the tax has been challenged many times over the years, it wasn’t until 2006 when a law firm filed a class action lawsuit against the Internal Revenue Service (IRS) on behalf of Radio Shack and “an unnamed class of businesses and individuals.”

NJ CAR wants to remind dealers that they have the opportunity to request a refund for excise taxes paid from March 1, 2003 through July 31, 2006. In order to apply the formula, eligible taxpayers need:

¨ April 2006 phone bill

¨ September 2006 phone bill

¨ The number of employees reported on their federal withholding tax return (Form 941) for the second quarter of 2006

¨ Total telephone expenses for the 41-month period from March 1, 2003 through July 31, 2006

The formula is an alternative to basing a refund request on the ACTUAL amount of tax paid. Whether a business uses the formula or requests a refund of actual taxes, they must use Form 8913, Credit for Federal Telephone Excise Tax Paid, to request the refund. Businesses will attach this form to their regular 2006 income tax return.

The formula and other information related to the refund process are available at the IRS’ Website (http://www.irs.gov/newsroom/article/0,,id=164032,00.html). If the link does not work, simply go to http://www.irs.gov/newsroom and look for the Telephone Excise Tax Refund link.