The phone tax refund is a refundable tax credit of excise taxes paid on long-distance telephone service from February 28, 2003, to August 1, 2006. The excise tax was ruled the subject of several lawsuits, and eventually the tax was repealed. Because of that, taxpayers are able to claim a one-time-only refund of the excise tax on their 2006 tax returns. Taxpayers who are not required to file a return can claim a refund of the excise tax using Form 1040EZ-T.
Taxpayers can choose between a standard refund amount between $30 and $60, or can claim a refund of actual taxes paid if they have phone bills to prove their expenses.
Apparently, some taxpayers are inflating their phone bills and claiming a higher refund amount. The IRS has said they will crack down hard on taxpayers and the tax preparers assisting them. Here's what the IRS has to say about the matter:
"While the vast majority of taxpayers are claiming the telephone tax refund correctly, we are seeing some clear abuse involving overstated refund requests," said IRS Commissioner Mark W. Everson. "People requesting an inflated amount will likely see their refund frozen, may have their entire tax return audited and even face criminal prosecution where warranted."
Frozen refunds? Audits? Criminal prosecution?!
Don't go to jail over a simple tax refund. It's just not worth it. As a reminder, any tax preparer who "guarantees" you a refund or helps you inflate your deductions or tax credits is acting unethically and can be sanctioned by the IRS and other government agencies. You should make sure that your tax pro is helping you to lower your taxes by taking full advantage of every deduction or credit you are legally entitled to. Unscrupulous preparers will only get you into tax trouble, and that's really the last headache anyone needs. To help you select a tax preparer, here are nine important questions to ask a tax pro.
More information:
- How to Claim the Telephone Excise Tax Refund
- Some Telephone Tax Refund Requests May Be Too High; IRS Will Deny Improper Requests (IR-2007-16)
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