The flat-rate long distance excise tax, which has been declared unlawful in every jurisdiction whose courts have taken it up, but which has been stubbornly enforced by an IRS sticking its fingers in its ears and singing “tra-la-la” is finally dead, and it’s taking the tax on other varieties of long-distance phone service with it.
The IRS formally gave up the fight (PDF).
Not only will they stop collecting the tax, but they plan to refund the tax collected over the last three years — $15 billion — with interest, even. They’re still working on the details, but there will be a line on your 1040 next year on which you can apply for a refund. If you didn’t save all of your phone bills for the last three years, they’ll even have a formula you can use to estimate how much they owe you absent the documentation.
This does not apply to the excise tax on local phone service. But when he announced this change of policy, Treasury Secretary John Snow took the opportunity to “call on Congress to terminate the remainder of this antique tax by repealing the excise tax on local service as well.”