Federal Excise Tax Advisory

Advocate Network Expertise Assists your organization in analyzing and providing supporting documentation for a Federal Excise

Tax refund on Long Distance and Wireless services

• Inventory eligible spend for the project - Long Distance, Conferencing and Wireless Services.
• Identify and Document the Applicable FET Payments.
• Complete filing draft documentation and forward to the client for IRS filing.

Federal Excise Tax Overview

The Federal Excise Tax (FET) was initiated in 1898 to support and fund the Spanish American War. The Tax has generated revenue from the taxation on luxury items. The revenue has come from all "common carriers" including rail, airlines, trucking companies and telecommunications companies.

In 2006 the IRS announced that the US Government would stop collecting the Federal Excise Tax on “bundled services” which includes, long distance, wireless (monthly and installation), and conferencing charges beginning August 1, 2006. Businesses can file for refunds on the FET paid between March 1, 2003 and July 31, 2006. All taxpayers (businesses and individuals) interested in receiving FET refunds must file a claim for this refund on their 2006 tax returns.

The IRS ruling provides refunds for

“Local and long distance service provided under a plan that does not separately state the charge for the local telephone service” and includes "Voice over Internet Protocol service (where local and long distance is provided), prepaid telephone cards, and plans that provide both local and long distance service for either a monthly fee or a charge that varies with the elapsed transmission time for which the service is used," whether through landline or wireless service.

List of refundable services includes:

• Long distance,
• Wireless, and
• Wireline services
• All Local services (including measured service) bundled with long distance

Refund may also include:

• Bundled services
• Certain installation charges
• Answering services
• Other select items