Company Helps Client Gain $330,000 Federal Excise Tax Refund
28 June 2006
A telecommunications expense management companyhas already helped one client claim more than $330,000 in refunds of federal telephone excise taxes. Arecent U.S. Treasury ruling is eliminating the tax and allowing refunds fordocumented payments made since March 1, 2003.
The U.S. Treasury ruling, handed down in May, entitles businesses to a 100percent refund of certain federal excise taxes they paid on long distanceand cellular phone bills for a 41-month period. For larger corporations,the ruling could mean hundreds of thousands of dollars in refunds.
"All individuals and businesses are entitled to a full refund of the threepercent tax they paid between March 1, 2003 and July 31 of this year," saidNancy Peckham, president and CEO of INI Global, a nationaltelecommunications expense management company in Madison, Wis.
Claims for refunds must be filed with corporate 2006 tax returns.Corporations may be required to produce detailed documentation validatingthe amount of federal excise tax claimed for refund. According to Peckham,"That information is contained in carrier billing statements but can be achallenge to calculate."
The federal excise tax on toll telephone services began in 1898 to fund theSpanish-American war, Peckham notes. Telephone service, a luxury at thetime, was targeted with the tax as Congress wanted to impact only the mostaffluent of taxpayers. The tax was to be charged on time anddistance-sensitive telecom usage.
After the war ended, the tax remained. In the 1990s, long distance andcellular rates went from being distance-sensitive to flat-rate orpostalized. Through further interpretation of the statute, it wasdetermined that the federal excise taxes have been incorrectly billed toindividuals and corporations for at least the past decade. The amount ofrefund to be issued to taxpayers is limited to the past 41 months, due tothe statute of limitations on federal taxes.
From 2004 to 2006, several companies, including American Bankers InsuranceGroup, OfficeMax, Amtrak, Fortis and Lexis, brought suit in federal courtand were awarded refunds ranging from $360,000 to $434,000 for theprevious 36 months of federal excise taxes on usage-basedtelecommunications. "Those awards set a precedent as numerous companiesscrambled to apply for the refund," said Peckham.
In May 2006, the U.S. Treasury surrendered to the litigation pressures andissued the ruling repealing the federal excise tax on telecom usageservices and allowing taxpayers to request a refund on their 2006 taxreturn.
In conjunction with the refund, the IRS has asked all long distance andcellular vendors to discontinue charging the excise tax as soon as ispractical, but no later than July 31, 2006.
"Gathering the documentation to get the refund may be cumbersome," saidPeckham, who has been in the telecommunications industry since the 1984.
"The biggest challenge, especially for most mid-market and largecorporations in filing for a refund, will be in the documentation of actualfederal excise taxes paid on long distance and cellular services over thistime period," she continued. "Companies will be required to obtain all longdistance and cellular billing from March 2003 through July 2006 and auditthe bills to determine the actual taxes paid on those services. Thedifficulty lies not only with the ability to obtain that information butalso in analyzing the tax information and separating out the portion of thefederal excise tax pertaining to long distance and cellular usage fromflat-rated services."
INI Global utilizes proprietary technology to pull that information fromboth electronic and paper telecom bills. "We have assisted our clients infiling for significant federal excise tax claims over the past two years,"Peckham said. "We have worked with our clients and our clients' carriers toobtain invoices and information necessary to completely document thepayment amount for the federal excise tax claims."
"We were able to help one of our larger clients file for an excise taxrefund in excess of $330,000," said Bob Makowski, vice president of salesand marketing for INI Global. "And we are going after another $229,000-plusfor the same firm.* In addition, we have even helped clients file forrefunds as low as $34,000."
After Aug. 1, 2006, companies will still need to audit their bills to makesure that the carriers do not continue to charge the federal excise tax onusage-based services. But after the filing of 2006 corporate tax returns,the opportunity to claim a refund will be over. "This is aclaim-it-or-lose-it deal from the IRS," said Peckham.
INI Global has been helpingcorporations across North America with management of telecommunicationsexpenses since its founding in 1991.
*Additional information on why this client is receiving two refunds isavailable via a link on the INI website home page.
Contact:R.W. (Bob) MakowskiINI Global1-800-467-7226
SOURCE: INI Global
Source: marketwire
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