Hang Up On War with Phone Tax Resistance

So what’s the deal with this phone tax resistance thing?

The phone tax is a 3% federal excise tax on your phone bill. Your bill is probably itemized in such a way that you can see exactly how much you are being charged each month for this tax.

The tax has a long history, and one that is closely-associated with war, which is one reason why war tax resisters in particular have targeted this excise tax for their protest. It was first enacted in to help finance the Spanish-American War, then was repealed after that war. It came back to life in the War Tax Revenue Act of , then died again after World War Ⅰ. It came back again and climbed to a 25% charge on long distance and a 15% charge on local calls during World War Ⅱ and the Korean War. , the tax started to wither away, but then when the Vietnam War started to hit the budget, the phone tax came back with a vengeance. In , Congress abandoned the ritual of continually extending and reënacting this “temporary” tax and made it permanent.

Unlike some taxes and fees, where the revenue collected is earmarked for a particular program, the phone tax money goes straight into the general fund just like your income tax.

The phone company is responsible for collecting this tax, but you as the phone user are responsible for paying it, and the IRS is responsible for enforcing this. I mention this technicality because it’s important in understanding the mechanics of resisting this tax.

To resist the federal phone tax, you simply look up the amount of the tax on your phone bill, deduct that amount from your payment, and (importantly) enclose a note with your check explaining what you have deducted and why. If you don’t do the last step, the phone company will just assume you’ve shorted them on your check. In fact, they’re likely to do this anyway, so prepare to have to explain yourself to somebody at the billing center at some point.

You do not owe this money to the phone company, and they should not threaten to cut off service for refusing to pay it. The law says you owe the money to the IRS, and the phone company is merely the middleman. Federal regulations are quite clear on this point:

That said, your long distance company is free to drop you if it doesn’t want to deal with the hassle or just doesn’t like your politics. Some phone companies, like Working Assets Long Distance and AT&T, have formal processes that they make available to their customers for opting out of the tax. Other companies would rather just pretend that this sort of thing doesn’t happen, and handle it on a more ad hoc basis. Some phone companies will even delete the line item from your bills and just report you to the IRS as a perpetual excise tax evader.

So what good does it do? It’s a practical protest, in that it actually withholds money from the government. The feds pull in about $6 billion a year from this tax. That said, the amount you pay is typically very small, so this is mostly a symbolic protest. Some people in the war tax resistance movement advocate it as a “first step” and a way to get more people interested in tax resistance. It’s pretty much risk-free these days. The IRS almost never goes after anyone for refusal to pay this tax. This, of course, could change.

Addendum: In , the US Congress voted to repeal the phone tax, but then-president Bill Clinton vetoed the bill.