A Tax Credit for All of Us

I've written before about the little-noticed "excise tax" that has appeared on our telephone bills for eons. It turns out that it dates back to the end of the 19th century, when the tax was levied to help pay for the Spanish-American War!

The tax has recently been decried in the media, and our government finally took action. The tax is going away and, better still, we're each due a refund for it. Here's the catch, though: we have a choice. We can opt to research and calculate what we paid over some 41 months and then calculate what we're due, according to IRS formulas; or we can just take a default credit, which is $30 if you have one exemption, $40 if you have two, $50 if you have three, or $60 if you have more. The second option requires no documentation from you, whereas the Office of Management and Budget has estimated that the first option will take you almost 14 hours, to gather the records and fill out the form.

Until recently, it looked like grabbing the standard credit would be far easier, though in most cases it would result in our receiving less money. Now, though, it seems that the first option may have gotten a little easier. Some telephone companies are helping out in the search for records of past bills. For example:

• AT&T's (NYSE: T) website notes that "Online copies of AT&T bills from the [Federal Excise Tax] refund period will be made available free of charge to customers wherever available. There will be a charge associated with obtaining paper copies of your AT&T bills."
• According to the Qwest (NYSE: Q) website, "Qwest will begin to make past phone bills available for the billing period between Feb. 28, 2003 and Aug. 1, 2006. At that time, Qwest will provide details on the method, format, and cost of delivering past bills."
• Vonage (NYSE: VG) has announced that: "...customers can access their web accounts at no charge for a full billing history, including the amount of Federal Excise Tax (FET) paid on long distance phone service."

Bigger refunds
By opting to do the legwork, you'll likely end up with a bigger refund. Dick Hansen of refundphonetax.com notes that:

"...individuals are averaging a refund of over $120 and higher now, with interest. Companies are averaging $50 per employee, so if a company has 100 employees, it may get a $5,000 refund. Car dealerships have been averaging a $3,000 to $5,000 refund, while gas stations are submitting an average $400 to $600 claim. A bank branch location may receive a $2,000 to $3,000 refund and a small insurance agency over $1,000."

Finally, a warning: It seems that a new dastardly kind of email spam relates to this refund. If you receive an email telling you to click on a provided link in order to get your refund credited to your MasterCard (NYSE: MA) or Visa, ignore or delete it. The email is just out to grab your credit card numbers and use them for nefarious purposes.

Learn more about the refund in:

• Another Line on the Tax Return
• You're Due a Refund!

And learn much more about all kinds of tax issues in our Tax Center, which features gobs of money-saving strategies.

For more straight talk about money and how to keep more of it in your pocket while still making the most of life, check out our new personal finance newsletter, Motley Fool Green Light. You can try it for free for a whole month, accessing all past issues, and there's no obligation.

AT&T is a former Stock Advisor selection. Mastercard is an Inside Value recommendation.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. The Motley Fool has a full disclosure policy.