WASHINGTON – More than a third of early tax return filers are not requesting the one-time telephone tax refund entitling them to at least $30, the Internal Revenue Service said Wednesday.
The IRS notice about mistakes in requesting the refund came a week after the tax agency sent out a warning that it would take action against taxpayers and tax preparers who improperly claim large refunds from the discontinued tax.
The government last August stopped collecting the long-distance excise tax, and has authorized a refund of tax collected on service billed during the period from March 2003 to July 2006.
Those claiming a standard refund amount, which needs no documentation, will receive $30 to $60, based on the number of exemptions they claim. People making claims on the actual amount paid over the 41-month period need not send records to the IRS, but should have documents to back up their claims in case the IRS has questions.
The agency said that in addition to more than one-third of early filers using Forms 1040, 1040A and others not requesting the refund, lower income people using Form 1040EZ-T are failing to show a refund amount on Line 1a.
Others it said, are requesting refunds based on the entire amount of their phone bills, rather than the 3 percent tax on long-distance and bundled service, or requesting amounts in the hundreds or thousands of dollars.
It advised taxpayers to file electronically because electronic-filing software flags often-overlooked tax breaks. The agency also reminded taxpayers that the break does not apply to the total phone bill or taxes paid on local-only service. Taxpayers are urged to stay away from tax preparers claiming they can get hundreds of dollars or more back.
Most taxpayers can claim the one-time refund on federal excise taxes for long-distance telephone service — whether for landline, cell phone or Voice over Internet Protocol. The government stopped collecting the tax after July 2006 after businesses repeatedly fought the tax and won.