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Lare & Associates can calculate these and many other savings in addition to providing you an inventory of all your telecommunication costs. For more information on how to save $20,000 or more see: http://www.lareassoc.com/operationalsavingss/ or call us at 206-465-1435. Disclaimer: Lare & Associates LLC are not tax preparation professionals. You should always check the information with your tax preparer. This information is offered to alert you to the opportunity to further reduce your telecommunication costs. WASHINGTON - The Internal Revenue Service has announced that it stopped collecting the federal excise tax on long-distance telephone service or bundled services (If Voice over Internet Protocol service, VoIP, provides both local and long distance service and the charges are not separately stated, such service is bundled service.). The rate was 3% of the charges billed for telephone services. An estimated $10 billion in excise taxes collected for long-distance service is expected to be refunded by the Internal Revenue Service in 2007. Anyone who paid the long-distance telephone tax will get the refund on their 2006 federal income tax return. The refund is a one- time payment received through your 2006 federal income tax return. It is available to individuals, businesses and non-profit organizations that paid long-distance taxes on a landline, cell phone, or Voice over Internet Protocol (VoIP). Because of a three-year statute of limitations, the IRS will be refunding excise taxes paid between February 28,2003 and August 1,2006 (the date when the government stopped collecting the federal excise tax on long-distance telephone service or bundled services). Taxpayers can take a standard amount of refund of $30 -$60 depending on the number of exemptions claimed on their tax return, or a refund of the actual amount by providing the IRS with an exact amount paid during the 41 month period. The excise tax does continue to apply to local - only service and will not be refunded by the IRS. How Do I Calculate My Refund? If you are a business you should attach your Form 8913 to your regular 2006 income tax returns. If you are a tax-exempt organization you must attach it to your Form 990-T. Formula: As a business or tax-exempt organization you can figure your refund amount by comparing two, 2006 telephone bills to determine the percentage of your telephone expenses attributable to the long-distance excise tax. Here are the steps: 1. First figure your telephone tax as a percentage of your April 2006 telephone bills (which included the excise tax for both local and long-distance service) 2. Next figure your telephone tax as a percentage of your September 2006 telephone bills (which only included the tax on local service). 3. Calculate the difference between these two percentages. 4. Apply that difference to the quarterly or annual telephone expenses to determine the amount of your refund for each period. Lare & Associates can calculate these and many other savings in addition to providing you an inventory of all your telecommunication costs. For more information on how to save $20,000 or more see: http://www.lareassoc.com/operationalsavingss/ or call us at 206-465-1435 More Details: The IRS excise tax refund is capped at 2 percent of the total telephone expenses for businesses and tax-exempt organizations with 250 or fewer employees. The refund is capped at 1 percent for those with more than 250 employees. Options for requesting this refund vary for sole proprietors, who file a Schedule C with the Form 1040, depending on the gross income reported on the Schedule C. Sole proprietors who report gross income of $25,000 or less on their Schedule C may use the standard amounts (standard refund of $30 -$60 depending on the number of exemptions claimed on their tax return) or request a refund based on their actual expenses (but you can not use the formula method). Sole proprietors reporting more than $25,000 of gross income have three options: 1. You can use the standard amounts ($30 for a person filing a return with one exemption, $40 for two exemptions, $50 for three exemptions and $60 for four or more exemptions) which cover both personal and business expenses; 2. Or you can use the above formula for your business expenses and actual for your personal ones; 3. Or you can use actual amounts for both business and personal. Taxpayers who choose to base their refund requests on the actual amount of tax paid should review their phone bills from March 2003 through July 2006. You need not have bills and records covering the entire refund period, but you must have records adequate to support the refund amount you are requesting. Taxes paid on local-only service are not eligible for the refund. In general, federal excise taxes paid on other types of service qualify. Federal access charges and state or local taxes and charges are not eligible for the refund. If you paid the federal excise tax on your long-distance internet plan, you can request the telephone tax refund. Internet long distance plans include broadband VoIP long-distance plans. If you decide not to use the standard amount, you must figure your refund using the actual amount of tax paid, based on your phone bills and other records. You need not have bills and records covering the entire 41-month period (March 2003 through July 2006), but you must have records adequate to support the refund amount you are requesting. The standard amount includes interest. For those basing their request on the actual amount of tax paid, the instructions for Form 8913 explain how to figure the interest amount. The standard amount includes interest. For those basing their request on the actual amount of tax paid, the instructions for Form 8913 explain how to figure the interest amount. Lare & Associates can calculate these and many other savings in addition to providing you an inventory of all your telecommunication costs. For more information on how to save $20,000 or more see: http://www.lareassoc.com/operationalsavingss/ or call us at 206-465-1435 Disclaimer: Lare & Associates LLC are not tax preparation professionals. You should always check the information with your tax preparer. This information is offered to alert you to the opportunity to further reduce your telecommunication costs. Additional Information * IRS at 1-800-829-1040, or www.irs.gov. * Telephone Tax Refunds: Questions and Answers for Businesses and Tax-Exempt Organizations, see: http://www.irs.ustreas.gov/newsroom/article/0,,id=164310,00.html * IR-2006-137, IRS Announces Standard Amounts for Telphone Tax Refunds, see: http://www.irs.ustreas.gov/newsroom/article/0,,id=161504,00.html * Telephone Tax Refund: Questions and Answers, see: http://www.irs.ustreas.gov/newsroom/article/0,,id=161506,00.html * IR-2006-82, Government to Stop Collecting Long-Distance Telephone Tax, see: http://www.irs.ustreas.gov/newsroom/article/0,,id=157706,00.html * Notice 2006-50, Communications Excise Tax; Toll Telephone Service, see: http://www.irs.ustreas.gov/pub/irs-drop/n-06-50.pdf Lare & Associates can calculate these and many other savings in addition to providing you an inventory of all your telecommunication costs. For more information on how to save $20,000 or more see: http://www.lareassoc.com/operationalsavingss/ or call us at 206-465-1435 Disclaimer: Lare & Associates LLC are not tax preparation professionals. You should always check the information with your tax preparer. This information is offered to alert you to the opportunity to further reduce your telecommunication costs. |
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