Last year, the U.S. Treasury Department announced that the 3 percent Federal Excise Tax (FET) would no longer be applied to long-distance telephone calls, including wireless mobile phone services.
This is a huge win for American consumers who will no longer be forced to pay this outdated tax. Additionally, the Internal Revenue Service (IRS) will be issuing refunds on long-distance services, including wireless, for the past three years.
According to the Treasury Department's announcement, eligible taxpayers will be able to apply for this refund with the IRS during the 2006 federal tax form filing season. The official deadline for the tax season will fall on Monday, April 16, 2007. According to the IRS website:
"The Telephone Excise Tax Refund (TETR) is a one-time payment available on your 2006 federal income tax return. It is designed to refund previously collected long distance telephone taxes. Individuals, businesses and tax-exempt organizations are eligible to request it."
The IRS has created a Q & A page to explain the process.
Initially imposed by President William McKinley in 1898 to help fund the Spanish-American War, the Federal Excise Tax (FET) was originally a luxury tax, at a time when only wealthy Americans had telephones.
The war lasted only four months, but the "Tax on Talk" remained for 108 years. Prior to this pro-consumer decision made by the U.S. Treasury Department, every person in the United States who made a phone call paid an extra 3 percent to fund a war that ended over a century ago.
Unlike other excise taxes, the money raised through the "Tax on Talk" was not earmarked for any specific purpose -- not even to improve service or support for the very telecom services that were being singled out for this discriminatory tax. Some pundits have labeled it the ultimate shameless federal slush fund.
In fact, the "Tax on Talk" made access to telephone services less affordable for many poor Americans. Regardless, members from both the Republican and Democratic parties actively supported keeping the tax in place. In particular, Senator Lamar Alexander (Republican from Tennessee) had argued vigorously to increase the tax, and to add taxation to internet access services.
If the tax remained in place over the next decade, it would have generated about $67 billion for the federal coffers, a congressional panel estimates. Altogether, this excise has raised more than $300 billion in its entire existence, according to the Congressional Research Service.
This is a huge win for American consumers who will no longer be forced to pay this outdated tax. Additionally, the Internal Revenue Service (IRS) will be issuing refunds on long-distance services, including wireless, for the past three years.
According to the Treasury Department's announcement, eligible taxpayers will be able to apply for this refund with the IRS during the 2006 federal tax form filing season. The official deadline for the tax season will fall on Monday, April 16, 2007. According to the IRS website:
"The Telephone Excise Tax Refund (TETR) is a one-time payment available on your 2006 federal income tax return. It is designed to refund previously collected long distance telephone taxes. Individuals, businesses and tax-exempt organizations are eligible to request it."
The IRS has created a Q & A page to explain the process.
Initially imposed by President William McKinley in 1898 to help fund the Spanish-American War, the Federal Excise Tax (FET) was originally a luxury tax, at a time when only wealthy Americans had telephones.
The war lasted only four months, but the "Tax on Talk" remained for 108 years. Prior to this pro-consumer decision made by the U.S. Treasury Department, every person in the United States who made a phone call paid an extra 3 percent to fund a war that ended over a century ago.
Unlike other excise taxes, the money raised through the "Tax on Talk" was not earmarked for any specific purpose -- not even to improve service or support for the very telecom services that were being singled out for this discriminatory tax. Some pundits have labeled it the ultimate shameless federal slush fund.
In fact, the "Tax on Talk" made access to telephone services less affordable for many poor Americans. Regardless, members from both the Republican and Democratic parties actively supported keeping the tax in place. In particular, Senator Lamar Alexander (Republican from Tennessee) had argued vigorously to increase the tax, and to add taxation to internet access services.
If the tax remained in place over the next decade, it would have generated about $67 billion for the federal coffers, a congressional panel estimates. Altogether, this excise has raised more than $300 billion in its entire existence, according to the Congressional Research Service.