The Scoop on FET
On May 25, 2006, the US Treasury made an important announcement: due to the increasing legal activity over the Federal Communications Excise Tax (FET), it would cease charging the tax on long-distance and cellular service. Carriers have until August 1, 2006 (that's Monday, by the way) to change their billing and stop collecting FET. What's more, every taxpayer in America--from you and me to the companies we work for--is entitled to claim an FET refund on their 2006 income tax returns. In essence, the government has given up a billion-dollar revenue source. And $13 Billion is available in refunds.
Getting your refund, however, isn't going to be as easy as you'd think. As with most IRS "offers," you have to read between the lines to get what's really coming to you. If you're an individual taxpayer, you have a choice: (1) you can just claim the standard opt-out amount (see this) on the "FET Refund" line. But (2) if you actually want the full amount of FET you paid over the last three years, you're going to have to prove it: pull out 3 years' worth of bill copies, calculate your FET payments to the penny, and then claim your amount paid. Oh, and you'd better keep your records in case you're audited. Naturally, most Americans don't have three years' worth of old telephone bills--which is precisely what the IRS is betting on.
Business taxpayers have it even harder. The IRS isn't going to let them claim an opt-out amount at all. If they want their FET back, they're going to have to dig out their long-distance and cell phone bills for the last three years, cull through them to isolate FET only charged on long-distance (not local) calls, and then claim the amount. As with individuals, the IRS is banking on the assumption that most businesses won't want to invest the time and resources to claim an FET refund.
But with $13 Billion at stake, isn't it worth it? We think so. Read on to find out more.
Getting your refund, however, isn't going to be as easy as you'd think. As with most IRS "offers," you have to read between the lines to get what's really coming to you. If you're an individual taxpayer, you have a choice: (1) you can just claim the standard opt-out amount (see this) on the "FET Refund" line. But (2) if you actually want the full amount of FET you paid over the last three years, you're going to have to prove it: pull out 3 years' worth of bill copies, calculate your FET payments to the penny, and then claim your amount paid. Oh, and you'd better keep your records in case you're audited. Naturally, most Americans don't have three years' worth of old telephone bills--which is precisely what the IRS is betting on.
Business taxpayers have it even harder. The IRS isn't going to let them claim an opt-out amount at all. If they want their FET back, they're going to have to dig out their long-distance and cell phone bills for the last three years, cull through them to isolate FET only charged on long-distance (not local) calls, and then claim the amount. As with individuals, the IRS is banking on the assumption that most businesses won't want to invest the time and resources to claim an FET refund.
But with $13 Billion at stake, isn't it worth it? We think so. Read on to find out more.
posted by Mark Horner @ 12:50 PM
2 comments
2 Comments:
Can you please provide details on how individual's can get a "opt-out" fixed refund? Thanks!
Sure. Individuals can claim the standard "opt-out" amount (to be determined) on their 2006 Federal Income Tax Return (Form 1040, etc.). There will be a line on your return for 'federal excise tax refund' or something similar, and a figure listed for you to claim. All you'll have to do is include that figure in your calculations as you're completing your return.
Thanks for your question.
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