Phone Calls May Suddenly Become Cheaper

Posted on 19. Apr, 2006 by in News

I don’t know about you, but when I was “on my own” for the first time and had to pay rent, sign up for phone service, etc. I never thought it was going to be terribly expensive – and I tried to keep it that way. When I signed up for phone service I didn’t sign up for three-way calling, long distance, or caller-id – just the basics. I couldn’t even call the major city 40 miles away in my same phone_closeup.jpgarea code – that’s how basic my phone service was. So imagine my suprise when I received my first telephone bill of $25. Of course the basic phone charges only amounted to about $10 and the rest were taxes. Ever since then I have been astonished at the types and amounts of taxes that telecommunication companies can (and do) charge. And if you need proof that they are silly taxes just call up your local phone company and ask what a “federal excise” tax is, and why you’re being charged. You’ll get some pretty interesting answers – but none of them the right answer. Luckily some relief may be coming soon.

According to people “close to the matter” and the WSJ, the Treasury Department is preparing to stop collecting the federal excise tax charged for phone use and refund billions of dollars to consumers and businesses. The change seems to have come after countless lawsuits in which the federal government has lost – apparently the judges in these cases are “seeing the light” and are realizing that laws put in place in 1898 (yes, that’s the 1800s) may need to be changed over time.

In 2000, Congress repealed the tax, at an estimated five-year cost of $24 billion but President Clinton vetoed the measure. As always, greed prevailed and the levy is still in place today. According to the Congressional Budget Office though, if the law is rescinded, the IRS would be required to refund payments going back for about three years.

All I have to say is: It’s about time!


  1. » Blog Archive » The Long-Distance Telephone Excise Tax is Dead! - May 26, 2006

    […] Not to long ago I wrote about how the Treasury Department was having a tough time fighting off the litigation surrounding the silly telephone excise tax everyone pays for no reason. Today, however, the IRS and treasury announced that the long-distance telephone excise tax is indeed dead! Taxpayers will be able to apply for refunds on their 2006 tax forms, to be filed in 2007. […]

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