Telecommunications Excise Taxes - Could Your Company Get a Refund?

Your company may be eligible for a partial refund of the 3 percent federal telecommunications excise taxes it has paid for the three years preceding the filing of a refund claim. A federal district court recently held that the Internal Revenue Service is not entitled to collect the telecommunications excise tax on certain telecommunications services because those particular services are not covered by the telecommunications excise tax statute. To protect your company’s right to a refund, you would need to file a refund claim.

By way of background, the telecommunications excise tax statute defines "toll telephone service" subject to the excise tax as voice quality telecommunications service for which a toll charge is levied "which varies in amount with the distance and elapsed transmission time of each individual communication." For some time, however, many large users of telecommunications services have contracted with their carriers for flat or "postalized" long distance rates, and