Washington, DC - Treasury Disconnects Telephone Tax

Washington, DC - Telephone callers will see one tax drop off their bills this summer and can look forward next year to a refund of federal taxes paid on long-distance and bundled services.
Treasury Secretary John Snow announced the government's decision to stop fighting companies that have been successfully challenging the tax in court.

Beginning July 31, consumers will stop paying a 3 percent federal excise tax on long-distance calls and bundled services. Consumers next year can also obtain a refund of taxes paid since March 2003, with interest, by asking for the money back through their 2006 tax returns, the Treasury Department expects to send $13 billion back to consumers.

Consumers typically pay a few dollars each month for the tax. A caller who pays $50 each month for long-distance calls would pay $54 of taxes in a year.