This Internet rumor is true

PT gets at least one email every couple of days circulating another Internet rumor. You know, the kind where you have to scroll down for twenty feet past all the lists of people who have simply hit 'Forward' without stripping out any of the previous lists of names.

Anyway, one came this week that is -- guess what! -- TRUE (thank you, CA!).

It concerns a one-time REFUNDABLE TAX CREDIT on your 2006 return (the one you file this year) for the Federal Excise Tax that has always been on your monthly phone bill.

Seems that tax was enacted by Congress to help pay for the Spanish-American War -- that's 1898 for those who may have forgotten.

It was an EXCISE TAX -- originally based on INTERSTATE telephone calls, collected by the telephone company from users and forwarded to the IRS quarterly. Theoretically, at least in the early days, the wealthy paid more (on the assumption they were more likely to make more calls and over longer distances) than working-class families, among whom telephones in individual homes were not common until the 1940s.

The tax has actually lapsed and been reinstated several times in its history. The current tax comes from a 1932 Act designed to help cover a Federal deficit owing to the precipitous decline in income taxes as a result of the Great Depression. It has been reauthorized 29 times since then, and in 1941 was extended to LOCAL telephone service, becoming at that time a tax on both the DISTANCE and the LENGTH of the call.

(This helps explain why you always saw not only the LOCATION called, but the LENGTH of the call, and led -- indirectly -- to the development of regional calling areas, the foundation of today's AREA CODES. There is a delicious irony in that -- with the development of wireless and cell phones -- Area Codes are no longer bound to geographic areas.)

When phone companies began to offer FLAT-RATE calling plans, in which the charge was NOT CALCULATED ON DISTANCE OR LENGTH OF CALL, change was in the wind.

Challenges to the excise tax ended up in the courts in several jurisdictions, and the IRS finally cried 'Uncle'.

The tax should have disappeared from your phone bill in October 2006.

AND the IRS has agreed to this one-time credit WHICH YOU MUST CLAIM WITH A SPECIAL FORM on your 2006 return. It will not be given at any other time.

To find out how to file for your refund and how much it might be, go to this helpful article on Snopes.com.

And enjoy a little justice. Your great-grandparents would be glad to know the Spanish-American War was finally paid for.


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