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File Federal Taxes Online

Federal Taxes - The IRS Owes You Money If You Have

Sunday, April 01, 2007

The IRS Owes You Money If You Have Paid Long Distance Phone Taxes

Tip! State and Local Taxes: Depending on where you live, you will face a variety of state and local tax requirements. All but nine states (Alaska, Wyoming, Nevada, Florida, Tennessee, South Dakota, New Hampshire, Texas, and Washington) have state personal-income taxes.

The IRS has decided to give up the fight on an ongoing legal issue regarding taxes it has collected on long distance telephone services. Here is the scoop.

The IRS Owes You Money If You Have Paid Long Distance Phone Taxes

Tip! Some categories of users are exempt from some taxes.

Every one of us pays for some form of long distance telephone service. The more you use the service, the more you start hunting for better rates. Whatever choice you make, however, you are always stuck paying a federal tax on the bill. For those of you with large long distance phone bills, this tax can add up quickly given the fact it is calculated at three percent of your total bill.

The tax in question is known as the federal excise tax on long distance telephone service. It was created in 1898. Yes, this tax arose well over one hundred years ago. As you might image, a few people started to wonder how a tax established in 1898 could possibly apply today, particularly given the advancement of telephone technologies. Turns out it doesn't apply! Given a chance to review the situation, five appellate courts have ruled the tax invalid.

Tip! Decide what you are up to doing. Can you go out and work with a company (like an H&R Block) to help complete your taxes.

After contemplating the situation, the IRS has decided not to challenge the legal rulings. Instead, it has voluntarily agreed to issue credits or refunds for the excise taxes paid the past three years. Specifically, you will be able to claim a refund of all taxes paid from February 28, 2003 till the date the IRS stopped collecting them.

To collect the refunds, the IRS will create a new box on all 1040 filing forms for the 2006 tax year. In practical terms, this means you will be able to check a box and get a refund when you prepare your 2006 tax return in 2007. The IRS will pay interest on these funds.

Tip! Invest in your children's names. Your kids can each earn up to $700 in investment income without paying any taxes if they are over fourteen.

It should be noted the refund is applicable only to the long distance excise tax. You still must pay local service taxes and the refund does not apply to taxes collected by states and such. Still, any refund is a good refund in my opinion.

How To Legally Avoid Taxes. New Product. Great niche market.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on taxes. Visit us to get more tax help.


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