[Infowarrior] - Telecom tax imposed in 1898 finally ends

[Richard Forno]

Telecom tax imposed in 1898 finally ends

By Marguerite Reardon
http://news.com.com/Telecom+tax+imposed+in+1898+finally+ends/2100-1037_3-610
1004.html

Story last modified Tue Aug 01 13:59:15 PDT 2006

The Spanish-American War has been over for more than 100 years, and now so
is the tax imposed in 1898 to help fund it.

As of Tuesday, all phone companies selling long-distance phone service are
legally required to eliminate the 3 percent federal excise tax on
long-distance service, which had been established in 1898 as a luxury tax on
wealthy Americans who owned telephones.

Verizon Communications said Tuesday that it has stopped collecting the 3
percent federal excise tax on monthly consumer telephone bills for
long-distance and bundled services.

After a long legal battle and strong urging from Congress, the Internal
Revenue Service and the Department of the Treasury decided in May to
discontinue the federal 3 percent excise tax on long-distance telephone
service effective Aug. 1.

It also decided not to apply the tax to wireless, voice over Internet
Protocol service, prepaid telephone cards and other bundled services. The
IRS also said it would allow taxpayers to claim a refund in 2007 for taxes
collected on those services retroactive to February 2003.

The last portion of the tax, pertaining only to local telephone service,
remains in effect. But Verizon and other telecom companies are urging
Congress to repeal the tax in total this year.

"We have been working for years on behalf of our customers to eliminate this
outdated and regressive tax," Bob Ingalls, president of Verizon's Retail
Markets Group, said in a statement. "This is a good first step in
alleviating consumers' telephone tax burden."