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in 1898, the US Federal Government decided to institute an excise tax
on Long-Distance Telephone Services as a way to help pay for the
Spanish-American War. The war ended, but the tax continued for 108 years.
Now, after a series of challenges in various courts, the Government has
decided to stop collecting the 3% tax on long-distance telephone services as
of July 31, 2006.
Long-distance
calls are now generally charged based on elapsed transmission time alone,
not on the time and distance involved. Therefore, it was argued, charges
paid for time-only services were not subject to the 3% excise tax on
"long-distance" calls.
Numerous courts
have agreed. As a result, individuals and businesses will be able to claim
refunds on their 2006 income-tax returns for excise tax paid for services
billed between February 28, 2003 and July 31, 2006.
The IRS has
reported it will issue a safe-harbor amount individual taxpayers can claim
so they don't have to collect all their old telephone bills to come up with
an "exact" amount.
