Just reach out and … get some of your tax money back.

That’s the word from the Internal Revenue Service, which is preparing to return an estimated $10 billion to individual taxpayers and another $5 billion to businesses and nonprofit organizations this year as part of a one-time-only refund for federal excise taxes charged on long-distance phone calls.

The government wiped the tax off the books last fall, disconnecting a revenue stream that had poured billions of dollars into the federal treasury since 1898, when it was created to finance the Spanish American War.

The tax started when telephones were such a novelty that only the wealthiest of Americans could dial up a fellow well-to-do phone customer, said Michael Devine, an IRS spokesman.

But now that phones and their signals connect virtually every man, woman, child, computer, fax machine and seemingly any other kind of electronic device, appliance or system, the tax has been relegated to history.

Now it’s simply a matter of giving phone customers – more than 160 million are eligible – their money back.

“If you paid the tax, you can get a refund,” Devine said. “Everyone who had a phone, and paid the tax, you get your money back. No problem.”

Standard refunds

The IRS has worked to make getting the refund as easily as possible, he said. For individual filers, the IRS has established standard amounts for refunds, based on the number of exemptions filed on each return:

¢ $30 for one exemption.

¢ $40 for two exemptions.

¢ $50 for three exemptions.

¢ $60 for four or more exemptions.

Taxpayers choosing to take the standard refund simply claim the credit on line 71 of Form 1040.

“Using this amount may be the easiest way for taxpayers to get their refund and avoid gathering 41 months of old phone records,” the IRS says, in its written advice to taxpayers.

Someone choosing instead to add up the taxes paid from each phone bill during the eligible refund period – after Feb. 28, 2003, and leading up to Aug. 1, 2006 – must fill out Form 8913 and attach the form to a completed tax return.

While it may prove tedious and complicated, one industry observer says, the process could pay off for people who made many calls and used multiple communications devices during the 41 months covered by the refunds. Such taxpayers will get refunds of the actual amount spent on the excise tax, not the standard refund.

“If you had large, monthly long-distance bills and you kept a copy of your bills for this period, it may be worth your time to add up the amount you paid,” said Bill Hardekopf, chief executive officer of SaveOnPhone.com, a company that follows the telecommunications industry and advises consumers on billing issues. “Don’t forget to include excise taxes paid on long distance usage with VoIP, cell, fax, computer and landline.”

Even people who aren’t required to file a tax return – people, such as certain retirees, whose annual incomes fall below federal standards for filing – can get their money back, Devine said. The form is the 1040EZ-T, which can be filed electronically or through the IRS’ Free File program; people choosing not to take the standard refund also would need to fill out Form 8913 and attach it to Form 1040EZ-T.

Work for businesses

Businesses and nonprofits, meanwhile, have a little more work to do.

Such taxpayers have no standard refund to fall back on. Instead, they must base their refund requests on the tax amount they paid, using one of two methods:

¢ Review actual phone bills for the 41-month period to determine the actual amount paid.

¢ Review bills from two months – from April 2006, which is before the tax was repealed; and September 2006, which came a month after the repeal – and estimate refunds using a formula provided by the IRS.

Brenda McFadden, a certified public accountant and owner of The McFadden Group LLC, in Lawrence, said that for many businesses the exercise won’t be worth the time. Time spent locating records, running computations and documenting payments could offset gains from getting any money back.

But it’s still a case-by-case situation, she said. Some companies could go through the exercise and see refunds of $40.

Tax is history

The decision to eliminate the excise tax on long-distance telephone service came after a long legal dispute that finally was conceded by the U.S. Treasury in May. At the time, Treasury Secretary John Snow hailed the decision as a victory for taxpayers, and the country:

“Today is a good day for American taxpayers; it marks the beginning of the end of an outdated, antiquated tax that has survived a century beyond its original purpose, and by now should have been ancient history.

“The federal appeals courts have spoken across the board. It’s time to ‘disconnect’ this tax and put it on the permanent ‘do not call’ list.”