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IRS Releases Safe Harbor Amounts for Telephone Tax Refunds; Businesses Must Prove Actual Tax Paid

Individual taxpayers who do not claim refunds of the federal telephone tax based on actual amounts paid have standard safe harbor amounts reaching $60 available to them. This is most helpful to those who did not save their telephone bills with taxed charged on them, and receipts showing tax paid. Taxes paid from March 1, 2003 through July 31, 2006 (a 41-month period) are eligible for the refund. Only the tax that applies to long distance service has been discontinued thus far.

Individuals can apply for refunds on 2006 returns, forms 1040 or 1040EZ-T. The refunds will reflect the amount of tax paid or the safe harbor amount. The safe harbor amount from $30 to $60 is based on the number of exemptions claimed on the return. Based on a three percent tax, the safe harbor covers from $1,000 to $2,000 in long distance phone bills over the 41-month period.

Businesses and nonprofit organizations cannot use the standard safe harbor amounts. Their refunds will be calculated on the actual amount of tax paid. They must submit Form 8913.

Reference: CCH Federal Tax Weekly, Issue Number 25

*Information provided is for general informational purposes and does not constitute tax advice. Call our office today for details on applying for refunds.