12/20/2006
Formula created to make filing simpler for businesses
The IRS has announced a one-time refund of previously paid long-distance telephone taxes, available to individuals, businesses and tax-exempt organizations.
The refund is available to anyone who paid long-distance taxes on landline, cell phone or Voice Over Internet Protocol services between Feb. 28, 2003, and Aug. 1, 2006. Taxpayers may request the refund on their 2006 federal income tax returns using Form 8913 (194 KB, PDF), Credit for Federal Telephone Excise Tax Paid. Instructions for using the form are now available on the IRS' Web site.
To save business owners the trouble of having to locate all of their phone records for the 41 months included in the refund period, the IRS has developed a formula that most businesses and tax-exempt organizations can use to determine the amount of their refund.
NFIB took steps to ensure the IRS had the concerns of small business in mind when developing the formula.
"We did have an opportunity to consult with the IRS in the development phase of the new telephone excise tax refund methodology," said NFIB Tax Counsel Macey Davis, "and they were very responsive to our concerns about the potential burdens for small businesses in computing their refund under the new formula."
The formula only requires two months of phone bills to be reviewed, though those eligible still must know their total telephone expenses for the full refund period, as well as "the number of employees they reported on their federal withholding tax return for the second quarter of 2006," according to the IRS. This number is necessary as the refund is capped at 2 percent of phone expenses for businesses with 250 or fewer employees and 1 percent for business with more than 250.
"Overall, the formula is fair and generous to small business," Davis said.
Businesses and non-profit organizations that were in operation any time between March 1, 2003 and July 31, 2006, and were billed for phone service from April 2006 through September 2006, can use the formula to calculate their refund amount.
Individuals wishing to claim the refund on their 2006 federal tax return may take a standard amount (which varies depending on the number of exemptions claimed), or they may request a refund on the total amount paid, which requires gathering all 41 months of phone records.
