Friday, Feb. 9
Posted 10:00 a.m. EST

Bad connection on phone tax refund

The IRS's message on how to get back incorrectly collected phone excise taxes is definitely not making it through to everyone. In fact, the agency reports that of returns filed so far, more than one-third of taxpayers did not request the telephone tax refund.

C'mon people! Don't leave your money in Uncle Sam's hands, especially since this is one time he really, really wants to give it back.

Part of the problem might be confusion on just how to claim it. The easiest way, as discussed in Bankrate's story on getting your phone tax money back, is to claim the standard refund amount established by the IRS.

Taxpayers can get between $30 and $60, depending upon the number of exemptions claimed on a return, by just entering the appropriate figure on their 1040EZ, 1040A or 1040. If you don't have to file a return, you can send in 1040EZ-T just to get back the long-distance excise money.

But even this standardized refund mechanism has raised some questions.

Bankrate reader John asks, "I am curious. If I have two phone lines and a cell phone, can I get $30 (or whatever amount) times three for the three lines?"

Sorry, John. I wish it were that easy.

Unfortunately, you can't simply multiply the standard amount by however many phone lines you had.

Instead, if your three phone line charges included long-distance service during the refund eligibility period, March 1, 2003, through July 31, 2006, and you're sure that the long-distance excise taxes on those accounts was more than the standard amount you can claim, you need to file Form 8913 detailing that in order to get back, to the penny, what you should.

To come up with the standard amounts, the IRS relied on actual telephone usage data supplied by phone service providers and the agency says the amounts are generally accurate based on family-size use patterns. Although you might have been able to make long-distance calls on all three accounts, the IRS thinking is that you probably didn't use all three to make the same calls simultaneously.

Let's say it was me with three lines. The IRS is pretty sure that just because I had access to triple calling outlets, I didn't make three times the long-distance calls. The usage model presumes, for example, that in a typical month, I first used my cell phone to make calls until I ran out of minutes. Considering how long my mother likes to keep me on the line, that didn't take long! The next week, I used my second phone line, placing long distance calls during the evening when the rates were lower. And the third phone was used during the last two weeks of the month and whenever I had to make other, higher day-rate calls.

Since the standard amounts were created using "average" numbers, the figures will be more than enough for some callers. For others, the standard amounts are too low.

So it comes down to deciding just how much more you can get by filling out Form 8913 vs. how much time and effort that process will take.

Of course, if any of those multiple phones is a business line, then you must file 8913 along with your business tax return to get the credit. To make things a bit simpler in these cases, the IRS has developed a formula that most businesses can use to figure the refund. To use the formula, business callers need only review their phone bills for the months of April and September 2006 instead of all 41 months in the refund period.

The IRS has posted details regarding business phone refunds as well an FAQ for individual callers on its Web site.