End of Long Distance Telephone Tax!

We might say "R.I.P." except that the end of the federal excise tax on long distance service doesn't bring us closer to our real goal of peace.

Nevertheless, we are happy to celebrate the end of the tax, even if it signals the demise of one of the easier taxes for individuals to resist as a protest to war.

The Treasury Department announced May 25, 2006, that as of July 31, 2006, the federal excise tax would no longer apply to long distance bills, including on cell phones, mixed local and long distance services, and Internet phone service. However, the tax will remain on local phone service until Congress passes legislation to abolish it, which would seem likely but there is no news on this as yet.

Taxpayers who have paid the federal excise tax on long distance service will be able to claim a refund for the last three years on their 2006 tax forms (filed by April 16, 2007). The refund amount will probably be based on an average amount of the excise tax paid annually by individuals as determined by the Treasury Department. Those who can prove they spent more will probably have to file a longer form with details on their long distance excise tax payments.

Federal courts had ruled against the IRS on the tax during the last couple years in cases brought by some large corporations who argued that the tax didn't apply to their flat rate long distance service; the law had been written to tax long distance calls based on time and distance of the calls, and the IRS was forced to pay out some big refunds.

So, resisters should read their bills carefully and assume that until further notice the federal excise tax will still apply to local phone service.

But uncork the champagne and say good-bye to at least one annoying federal tax that has had a long association with war.

Treasury Department announcement online: www.treas.gov/press/releases/js4287.htm

See the New York Times article from May 26, 2006, by downloading an Acrobat PDF at endofexcisetax.pdf