Thursday, February 08, 2007
Do Not Overlook the New Federal Telephone Excise Tax Refund Available
Taxpayers who have paid long-distance telephone excise tax on their telephone bills can request a one-time refund on their 2006 income tax returns. The reason for this is that the Federal government will not be collecting any more excise tax on long-distance telephone charges. Several Federal court decisions have held that the tax does not apply to long-distance telephone services as billed. All taxpayers who paid long-distance Federal excise taxes will be eligible for this new refund including individuals, sole proprietors, corporations, partnerships, and tax exempt organizations. Generally, the tax refund is based upon long-distance telephone services billed after February 28, 2003 and before August 1, 2006.
Businesses (including sole proprietorships, corporations and partnerships) and tax exempt organizations are offered two methods by which they can calculate their refunds. In either case, businesses and tax exempt entities need to file Form 8913 (Credit for Federal Telephone Excise Tax Paid) to claim the refund. Actual refundable long-distance excise taxes can be totaled for the 41 month period after February 28, 2003 through August 1, 2006. The second permissible method would be to use a specific formula published by the Internal Revenue Service. The formula method is less time consuming and it may or may not produce a higher refund. Basically, this quick formula method requires business and tax exempt taxpayers to obtain two telephone bills – one from April 2006 and one from September 2006. The information obtained from these two telephone bills will result in calculating a percentage of long-distance telephone excise tax paid on long-distance service. Form 8913 will contain certain refund limitations and it will provide details for computation purposes.
The refund procedure is different for individual taxpayers. Individual Form 1040 taxpayers can choose a standard refund amount based upon the number of exemptions they claim. This standard amount will only require one line on the Form 1040 to be completed without filing Form 8913. The standard refund will be an amount between $30 and $60 per return. The standard refund amount is based on data the IRS has concerning the average long-distance telephone usage applicable to an individual, family or household. If an individual taxpayer declines to use the simplified standard method, they can file Form 8913 with their Form 1040 and compute their refund based upon the actual tax paid using the 41 months of telephone records after February 28, 2003 and before August 1, 2006.
It is very important to remember to take advantage of this Federal excise tax refund for our tax clients. Tax organizers mailed to clients may need to be updated to request the necessary information to accurately prepare the 2006 tax return. Another thought might be to prepare a general form letter to forward to clients which will request the necessary information needed to compute this excise tax refund if the computation methods will be used.
As one of the leading accounting and consulting firms in New Jersey, Cowan, Gunteski & Co., P.A. understands the importance tax planning so that you can keep more of your hard earned money. Contact Michael V. DeMola at 732-349-6880 extension 119 or mdemola@cowangunteski.com for more information on tax planning strategies for your particular situation.
About Cowan, Gunteski & Practice, P.A.
As a diversified certified public accounting firm, Cowan, Gunteski & Co., P.A. is committed to being an active partner in their client’s growth by delivering value driven accounting and profitability consulting services. Visit http://www.cowangunteski.com/ for more information on the services available to meet your unique needs.
Submitted by Fran Kirschner, Frantasy Enterprises
Businesses (including sole proprietorships, corporations and partnerships) and tax exempt organizations are offered two methods by which they can calculate their refunds. In either case, businesses and tax exempt entities need to file Form 8913 (Credit for Federal Telephone Excise Tax Paid) to claim the refund. Actual refundable long-distance excise taxes can be totaled for the 41 month period after February 28, 2003 through August 1, 2006. The second permissible method would be to use a specific formula published by the Internal Revenue Service. The formula method is less time consuming and it may or may not produce a higher refund. Basically, this quick formula method requires business and tax exempt taxpayers to obtain two telephone bills – one from April 2006 and one from September 2006. The information obtained from these two telephone bills will result in calculating a percentage of long-distance telephone excise tax paid on long-distance service. Form 8913 will contain certain refund limitations and it will provide details for computation purposes.
The refund procedure is different for individual taxpayers. Individual Form 1040 taxpayers can choose a standard refund amount based upon the number of exemptions they claim. This standard amount will only require one line on the Form 1040 to be completed without filing Form 8913. The standard refund will be an amount between $30 and $60 per return. The standard refund amount is based on data the IRS has concerning the average long-distance telephone usage applicable to an individual, family or household. If an individual taxpayer declines to use the simplified standard method, they can file Form 8913 with their Form 1040 and compute their refund based upon the actual tax paid using the 41 months of telephone records after February 28, 2003 and before August 1, 2006.
It is very important to remember to take advantage of this Federal excise tax refund for our tax clients. Tax organizers mailed to clients may need to be updated to request the necessary information to accurately prepare the 2006 tax return. Another thought might be to prepare a general form letter to forward to clients which will request the necessary information needed to compute this excise tax refund if the computation methods will be used.
As one of the leading accounting and consulting firms in New Jersey, Cowan, Gunteski & Co., P.A. understands the importance tax planning so that you can keep more of your hard earned money. Contact Michael V. DeMola at 732-349-6880 extension 119 or mdemola@cowangunteski.com for more information on tax planning strategies for your particular situation.
About Cowan, Gunteski & Practice, P.A.
As a diversified certified public accounting firm, Cowan, Gunteski & Co., P.A. is committed to being an active partner in their client’s growth by delivering value driven accounting and profitability consulting services. Visit http://www.cowangunteski.com/ for more information on the services available to meet your unique needs.
Submitted by Fran Kirschner, Frantasy Enterprises
