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Verizon Stops Collecting US Long Distance Phone Tax

by Leroy Baker, Tax-News.com, New York

04 August 2006

Verizon, the telecommunitations firm and internet service provider, has ceased collecting the 3% US federal excise tax on monthly consumer telephone bills for long-distance and bundled services, following a recent decision by the Internal Revenue Service.

The company announced Tuesday that customers will be able to obtain a refund or credit from the IRS on their 2006 federal income tax returns for the portion of the excise tax that was applicable to those services and that customers paid over the past three years.

The last portion of the tax, pertaining to only local telephone service, remains in effect. However, Verizon and other telecom companies are urging Congress to repeal the tax in total this year.

"We have been working for years on behalf of our customers to eliminate this outdated and regressive tax," stated Bob Ingalls, president, Verizon Retail Markets Group.

"This is a good first step in alleviating consumers' telephone tax burden," he added.

Verizon will also no longer collect tax on wireless and VoIP services, prepaid telephone cards and other bundles services.

The IRS announced that it would stop collecting the unpopular federal excise tax on long-distance telephone services in May following decisions in five federal appeals courts which held that the tax does not apply to long-distance service as it is billed today.

The tax on telephone services was first imposed in 1898 to help pay for the Spanish-American War, but the tax no longer funds any specific programs.

The IRS will offer a simplified method for individuals to use in claiming a refund for federal excise tax paid on long-distance services and bundled services billed after February 28, 2003 and before August 1, 2006.

“So taxpayers won’t have to spend time digging through old telephone bills, we’re designing a straightforward process that taxpayers may use when they file their tax returns next year,” IRS Commissioner Mark W. Everson stated in May's announcement.

http://newscenter.verizon.com/proactive/newsroom/release.vtml?id=93648&PROACTIVE_ID=cecdc6c8cccfcfcacdc5cecfcfcfc5cecdcec8caccc9cac6cec5cf

 

 






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