How Much Money Are You Willing to Leave Behind?

Here are two examples of how the IRS' business estimation method will adversely affect FET refunds:

Example 1:
Total Apr. 2006 Phone Bill: $5,000 = $144 paid FET = 2.8% of total bill
($3,120 local taxable & $1,680 LD/cell taxable)

Total Sep. 2006 Phone Bill: $5,000 = $ 24 paid FET = .4% of total bill
($800 local taxable & $4,000 LD/cell non-taxable)

percentage difference = 2.4%

This is the percentage difference to be applied to every month's total bill for the entire 41- month period. However, the IRS has placed a 2% cap on the differential percentage. Therefore your business will lose .4% of the monthly tax amount to which you are entitled for each of the 41 months.

Example 2:
Total Apr. 2006 Phone Bill: $6,000 = $174 paid FET = 2.9% of total bill
($2,900 local taxable & $2,900 LD/cell taxable)

Total Sep. 2006 Phone Bill: $6,000 = $ 87 paid FET = 1.4% of total bill
($2,900 local taxable & 2,900 LD/cell non-taxable)

percentage difference = 1.5%

Again, apply the 1.5% differential percentage to all bills in the 41-month refund period:

Total July 2005 Phone Bill: $8,000
($1,500 local taxable & $5,300 LD/cell taxable)
Estimation Method: $8,000 x 1.5% = $ 120
Actual LD/cell paid: $5,300 x 3% = $ 159
FET loss using Estimation Method: $ 39

If this amount were lost each month ($39 x 41 months), your business would lose $1,599 -- which represents a 25% loss of the refund you're owed.

If you use the IRS' estimation method...

...the greater your long-distance and cell usage is over local usage between April and September 2006, the more FET refund you'll lose. And, the greater the long-distance and cell usage was over local usage in the past compared to the two-month estimation period, the more FET refund you'll lose.

Looking for an alternative? UAC can help...read on.