Information on the Telephone Excise Tax Refund

The Telephone Excise Tax Refund (TETR) was a one-time payment available on your 2006 federal income tax return. It was designed to refund excise taxes previously collected on long distance telephone services billed after Feb. 28, 2003, and before Aug. 1, 2006. Most phone customers, including most cell-phone users, qualified for the refund. Over 70 percent of individuals who were eligible to request the refund did so last year on their tax year 2006 returns.

If you were one of the people who did not request the refund on your tax year 2006 return, you can file an amended tax return for 2006. Individuals who did not have a filing requirement in 2006 can still use a special short form, Form 1040EZ-T PDF, to request the refund. Individuals with low income, including many senior citizens not required to file a regular tax return, may qualify to use Form 1040EZ-T. You cannot request a refund of telephone excise taxes on your tax year 2007 tax return.

Amending an Individual Tax Return for TETR

To amend your individual tax year 2006 return, you must file a Form 1040X PDF. If the only change to your return is a request for a refund of the federal telephone excise tax, do the following:

• Fill in the top portion of Form 1040X through line B.
• On line 15, enter the amount being requested in columns B and C, and write “FTET” on the dotted line next to line 15.
• Write “Federal Telephone Excise Tax” in Part II, Explanation of Changes.
• Sign the Form 1040X (both spouses must sign if filing jointly) and mail it to the IRS processing center servicing your state.You can find the address on the Form 1040X instructions PDF.
• If you are requesting a refund of the actual amount of telephone excise taxes paid rather than the standard amount (see table below), you must complete and attach Form 8913 PDF, Credit for Federal Telephone Excise Tax Paid.
• A request for a refund of the actual amount of taxes paid should not exceed 3 percent of your total phone bill for long distance or bundled service billed after Feb. 28, 2003 and before Aug. 1, 2006.
• Stay away from tax preparers who falsely claim that many, if not most, phone customers can get hundreds of dollars or more back under this program.

If you are making multiple changes to your tax year 2006 return, you must fill the form out completely according to the instructions. 

Tips for Individuals Requesting the Refund

If you plan to file a Form 1040X or 1040EZ-T, here are some tips to help you figure the refund correctly and get it quickly:

• To ensure you are requesting the correct amount, read the Qs and As for Individuals.
• Individuals can request a refund of either the actual amount of taxes paid during the applicable time period or they can request a standard amount. About 99 percent of returns requesting the telephone tax refund chose the standard amount. Though the standard amount is optional, it is easy to figure and approximates the eligible amount for most telephone customers. The standard amount is based on the number of exemptions you can claim on your return and are shown in the table below.
   

*If you can be claimed as a dependent on someone else’s return, you cannot use the standard amount.

• If you paid more than the standard amount, you may figure your refund using the actual amount of tax shown on your phone bills and other records and request it on Form 8913. Just attach Form 8913 to your 1040X or 1040EZ-T. Base your refund request on the three-percent federal tax paid, not the total phone bill. Do not include any taxes paid on local-only service. You must have the phone bills or other records to adequately support the amount you are requesting. These documents should not be sent along with the refund request but should be retained in case the IRS questions the amount requested. To complete Form 8913, interest factors specific to individuals and other non-corporate returns must be used for returns filed after April 17, 2007.
• If you are not sure whether you paid the telephone excise tax, check the portion of your telephone bill that relates to long-distance or bundled service. Service providers use a number of different terms to identify the tax. Phrases to look for include:
  • English-language phone bills — Federal, Federal Excise 3%, Federal Excise @ 3%, Federal Excise Tax, Federal Tax, Fed Excise Tax and FET
  • Spanish-language phone bills — Impuesto Indirecto Federal and Impuesto federal.

Typically, this federal tax amount is not combined with any other tax or surcharge on a customer's bill. In other words, it is normally shown as a separate line item.

• If you filed Schedule C, E or F and have more than $25,000 in gross receipts, you may be eligible to use the special formula for businesses.
• Do not file duplicate requests. If you plan on filing a 1040X for 2006, do not file Form 1040EZ-T. The 1040EZ-T is for people who did not file a regular income-tax return.
• If you are filing Form 1040EZ-T, choose direct deposit. You can get your refund at least a week sooner by having it deposited directly into your checking or savings account. Direct deposit is not available for those filing Form 1040X.

Tips for Businesses and Tax-Exempt Organizations Requesting the Refund

• Businesses and tax-exempts can base their telephone tax refund requests on the actual amount of tax paid on phone bills for the 41-month refund period or they can review their bills for 2 months and use a special formula to figure the refund.
• Whether requesting a refund for the actual amount or using the special formula, businesses must fill out Form 8913, Credit for Federal Telephone Excise Tax Paid, and attach it to their amended income tax return: Form 1120, 1120S, 1065 or 1041. Instructions for each of these forms contain information about filing an amended return and can be found on the forms and publications page. Instructions vary for each form.
• Likewise, tax-exempts, including churches and charities, must fill out Form 8913 and attach it to their amended Form 990-T. The instruction for this form contains information about filing an amended return and can also be found on the forms and publications page.
• To complete Form 8913, use the appropriate interest factors for corporations for returns filed after April 17, 2007.

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