Good Luck Getting That Phone Excise Tax Back

from the death-and-taxes dept

A few months back, the Treasury Department finally caught wind that the Spanish-American War had ended 108 years ago, so perhaps it would be a good idea to repeal the excise tax on long-distance phone calls orginally enacted to help pay for it. The move was lauded by consumer groups, mobile operators and businesses, particularly because people would be able to claim back the last three years' worth of the tax they'd paid. But -- surprise, surprise -- businesses are finding out claiming the refunds is far from easy. For the general public, the IRS is expected to set an amount people can claim back without any documentation, but businesses must go back and look at old phone bills, then calculate what tax they paid, something made even more complicated by the structure of the tax, which was dependent on the length and distance of each call. For small businesses, the headache can be getting their hands on the old bills, with many providers charging for duplicate copies. For larger businesses, the sheer monumentality of the task is staggering for companies with thousands of and employees in multiple locations, and tons of phone lines from multiple providers. Of course, you might think that since courts ruled on multiple occasions that the IRS shouldn't have imposed the tax in the first place, they might accept some measure of responsibility in the matter. Then again, it is the IRS.

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  1. identicon
    Celes, 1 Aug 2006 @ 11:00am

    A staggering task?

    I'm not sure that retrieving these phone bills is going to be such a monumental task for businesses. Most smaller companies keep their invoices filed by vendor, and sometimes by year. It should be pretty easy to just pull everything out of the folders for the phone companies. For larger companies, of course, it may be more involved, but invoices are likely to be filed similarly (or perhaps by location and then by vendor), and many companies outsource their document storage to other companies like Iron Mountain, who are paid to know exactly where to find the bills in question (as long as the company has properly labeled the box, of course).

    That said, it seems that calculating the tax paid will be a much bigger challenge, unless your phone company actually breaks it down on your bill for you.

    But the last sentences of the post confuse me.
    Of course, you might think that since courts ruled on multiple occasions that the IRS shouldn't have imposed the tax in the first place, they might accept some measure of responsibility in the matter. Then again, it is the IRS.

    Responsibility for the tax, yes, which they are doing by allowing a credit for the past three years' worth of tax paid. Granted, three years does not nearly cover the amount of tax that should be credited, but if companies are balking at having to go through three years' worth of records, 100 years might just be too much to ask.

    But are you implying that companies should not be required to furnish proof during an audit of what they paid? (And an audit is the only time proof would actually be required; it is not sent in with the tax return). We're already talking about how companies take shady measures to reduce the amount of income tax they pay. If there is not at least the threat of having to provide proof, I'm sure companies looking for a tax reduction will be all over that new line on their 1120.


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