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Home Front Economy
Treasury: Telephone tax refund for everyone
2006-05-25
Treasury Dept. concedes a Spanish-American War tax on long-distance service is antiquated and consumers are entitled to a refund.
Ya think?
NEW YORK (CNNMoney.com) - After losing several court battles, the U.S. Treasury on Thursday said it would provide refunds to consumers for a federal excise "luxury" tax on long-distance service, the origins of which date back to 1898 to help pay for the Spanish-American War.

The refund will apply to the 3 percent excise tax billed to them on long-distance service since Feb. 28, 2003 and will include interest. Consumers will be able to claim it on their 2006 tax returns, which they will file in 2007.

"Today is a good day for American taxpayers; it marks the beginning of the end of an outdated , antiquated tax that has survived a century beyond its original purpose, and by now should have been ancient history," said Treasury Secretary John Snow in a statement. "The Federal Appeals courts have spoken across the board. It's time to 'disconnect' this tax and put it on the permanent 'do not call' list," Snow added.

The tax was passed in 1898, when there was no federal income tax and telephone service was something that only the rich had access to. It was designed as a luxury tax to help the government during a time of high military spending. Since then, it has become a good revenue generator for the Treasury, raising $5.9 billion in 2005.
Posted by:tu3031

#9  One wonders what other outdated taxes we are paying......

Is that nutty e-Rate surtax still around? DeaconMan still don't have broadband.
Posted by: 6   2006-05-25 19:39  

#8  USN, At least your daughter doesn't have one for a father..... :)

One wonders what other outdated taxes we are paying......
Posted by: CrazyFool   2006-05-25 15:24  

#7  I really don't want to know how much was spent defending that tax. Would have been better if it had just quietly been removed from the roles and faded off into the susnset, IMHO.
And before anybody launches lawyer jokes, my daughter has one for a brother.......
Posted by: USN, ret.   2006-05-25 15:19  

#6  lol Frank...
Posted by: mcsegeek1   2006-05-25 15:10  

#5  the IRS gets upset when you refer to paying taxes as a "trip to Hershey Park" or any other profane euphemism....
Posted by: Frank G   2006-05-25 14:58  

#4  Okay, here's some details from TaxProf Blog:

The Treasury Department and IRS announced this morning that after losing in five circuit courts of appeals, the Government is throwing in the towel and will no longer seek to enforce the 3% excise tax on long-distance telephone calls enacted during the Spanish-American War of 1898 as a "luxury" tax on wealthy Americans who owned telephones. The IRS will will issue $15 billion in refunds to consumers for long-distance telephone service taxes paid over the past three years:
No immediate action is required by taxpayers.
Refunds will be a part of 2006 tax returns filed in 2007.
Refund claims will cover all excise tax paid on long-distance service over the last three years (time allowed given statute of limitations).
Interest will be paid on refunds.
The IRS is working on a simplified method for individuals to use to claim a refund on their 2006 tax returns.
Refunds will not include tax paid on local telephone service, which was not involved in the litigation.

So, $15 billion divided over 103 million taxpayers = $145 (approximately). Trip to Hershey Park!
Posted by: Jonathan   2006-05-25 14:47  

#3  ...Well, like Dad always says, it beats a poke in the eye with a sharp stick.

Mike
Posted by: Mike Kozlowski   2006-05-25 14:40  

#2  Consumers will be able to claim it on their 2006 tax returns, which they will file in 2007.

But only if they itemize....

Seriously, how is this supposed to work?
Posted by: someone2   2006-05-25 14:30  

#1  According to irs.gov, Americans filed 102 million tax returns as of 4/21/06. Let's assume 1 million late filings for a total of 103 million taxpayers. $5.9 billion in the refund kitty means that each taxpayer gets (drumroll) $57.84. I guess I'll take the wife and kids out for dinner at Friendly's. (Now, if we included ALL revenues collected by that tax we could be talking money.)
Posted by: Jonathan   2006-05-25 14:09  

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