Did You File for Your Phone Tax Refund? There is Still Time

If you have put off filing for your phone tax refund (Telephone Excise Tax Refund, or TETR) because you didn't want to take the trouble to gather up all your phone bills for over 3 years, the IRS has simplified the requirements:

First, to be eligible for this refund, your business must have had one or more phones for the 41- month period of eligibility (between March 1, 2003, and July 31, 2006, and continued to use the phone through September 2006).

Then, you may use a simplified formula for computing phone expenses. You only need to review your phone bills for two months, instead of the 41 months in the refund period. If you don't have the detailed phone bills, you may also estimate, if you have the actual phone bills.

You will also have to gather two other pieces of information:

• The number of employees you reported on your quarterly tax return (Form 941) for the second quarter of 2006 and,
  
• Your total phone expenses for the 41-month period.

To receive the refund, you must file an amended 2006 business tax return.

For more details and examples, the IRS has a publication: Telephone Tax Refunds: Questions and Answers for Businesses and Tax-Exempt Organizations.

One final note from the IRS:

A request for a refund of the actual amount of taxes paid should not exceed 3 percent of your total phone bill for long distance or bundled service billed after Feb. 28, 2003 and before Aug. 1, 2006. Avoid tax return preparers who falsely claim that many, if not most, phone customers can get hundreds of dollars or more back under this program.

If you have a high volume of phone calls, even 3 percent is worth going after.