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Phone Taxes
(3% federal tax on telephone bill)

Introduction

The tax as it appears on telephone bills

The tax law imposing this tax - statutes

The tax law imposing this tax - regulations

My actions to become a non-taxpayer with regard to this tax

How To Get a Phone "Tax" Refund

Introduction

Back in mid-October 2000, fellow tax discussion group member Alex sent me an e-mail message suggesting an addition to this site that has resulted in my discovery, and recent implementation, of yet another federal tax "savings plan".  Alex said, in part:

Arthur: 
  Was just browsing your website, and thought of an addition you might
  make: IRC section 4251, allegedly imposing the 3% federal tax
  we see every month on our telephone bills, has NO implementing
  regulation.  Therefore, it's not law, and no one is bound to pay
  it!  I just call my local and [long distance] phone companies every
  month and tell them I'm deducting the balance.  They CANNOT shut off
  your service or enforce collection in ANY way.  All they can do is
  inform the buffoons at the IRS that you refuse to pay. ... The Feds
  collect some $20 BILLION a year from this totally bogus tax!  So, as
  well as no longer paying 'income' tax (yes, I'm a Schiffite non-payer,
  too ...), Patriots should be aware that they no longer have to pay
  this tax either!  Just a suggestion; keep up the great work!

I shoved this off to the side for a while, then recently revisited it.  I did look in the Parallel Table of Authorities, which as you may recall from elsewhere on this site cross references statutes and regulations.  Alex is right in that there are no regulations listed for 26 U.S.C. (I.R.C.) 4251, and I did verify that Section 4251 is where the three percent tax is imposed.  Let's start at the beginning, by looking at sample telephone bills.  Then, I'll reproduce the appropriate sections of the law and finish by describing what steps I have taken to date to become a non-taxpayer of yet another type of tax.

The tax as it appears on telephone bills

The 3% federal tax shows up in three places on a Verizon (formerly Bell Atlantic) local telephone service bill - in the sections titled basic charges, non-basic charges, and Verizon toll charges.  You can see on the telephone bill that the tax is simply labeled "Federal tax".  The tax shows up in one place on an AT&T long distance bill - in the section titled Taxes and surcharges.  You can see on that telephone bill that the tax is again labeled "Federal tax".  AT&T computes the tax by calculating three percent of AT&T One Rate Plan calls, AT&T direct dialed calls, and even the "National access contribution".

For the bills shown, I saved just 84 cents on the local bill, but a more significant $3.61 on the long distance bill.  If these bills are considered typical, the savings for me will be in excess of $50.00 per year.  That amount will not change my lifestyle much, but heck, it's my money, and I am currently paying it under the guise of a tax that does not legitimately apply to me.

The tax law imposing this tax - statutes

Here is the relevant part of the Internal Revenue Code where the tax is imposed.  We are looking at Subtitle D (Miscellaneous Excise Taxes), Chapter 33 (Facilities and Services), Subchapter B (Communications).  There are four sections in this subchapter, 4251 through 4254.

Section 4252 defines local telephone service, toll telephone service, teletypewriter exchange service, and private communication service.  Section 4253 lists the exemptions.  Section 4254 shows how the tax is computed.  Section 4251 is the only one of the four here that concerns us.

24 July 2005 - I dug the original statute out of the law books at Villanova Law Library.  The tax in question came about on June 13, 1898.  See the statute at large here: (cover sheet from the volume of the statutes at large that the statute appears in, beginning of Chapter 448, which is "An Act To provide ways and means to meet war expenditures, and for other purposes," and the page describing the tax.

Important to note is how the one cent tax is imposed on the owner or operator of a telephone line, not the users of the telephone lines.  What has evidently happened since then is the phone companies have passed this tax onto us.

The tax law imposing this tax - regulations

Even though the Parallel Table of Authorities shows no regulatory backing for 26 U.S.C. 4251-4254 in its cross reference table, I find it a good idea to search for related regulations.  I did that for the Notice of Deficiency I received in December 1999, and I am doing it again here.  Firing up my tax law CD-ROM and searching for "4251" pulled out this relevant part of volume 26 of the Code of Federal Regulations.  We are looking at Subpart C (Communications).

The way I read this section is that (a) says 26 U.S.C. 4251 imposes a tax on general telephone service, but (b) says that the tax imposed was ended in July 1965.  As you see, Section 49.4251-1 lists only Treasury Decisions as its authority, and thus is not a legislative regulation (is not binding upon the public).  Next, we'll look at Section 49.4251-2, which includes the "L" word.

Section 49.4251-2 uses the term "liability" in the title of one of its subsections, but does not make anyone liable for a tax, as does, for example, 26 U.S.C. 4401(c) and its corresponding regulation, 26 C.F.R. 44.4401-2, which deal with taxes on wagering:

You can see how clear they can be with respect to making someone liable for a tax when they want to.  In any case, I just included the regulation extracts for Section 4251 as another example of the research process for a part of the tax law:

1. Examine the applicable statute(s);
2. Check in the Parallel Table of Authorities for cross referenced regulations;
3. Check the type of the regulations found in step 2 to be either legislative (binding on the public) or interpretative/procedural (not binding on anyone but workers for the agency); and,
4. Even in the absence of cross referenced regulations, search 26 C.F.R. for regulations bearing the same number as the statute.  You will usually find some regulation, but it will end up having no statutory authority and thus not being legislative in type.

So, we've got the telephone companies, local and long distance, charging a 3% federal tax amount on telephone services; it appears that the tax in question is imposed in Section 4251 of the Internal Revenue Code; and that section has no regulatory authority.  The regulations that might be assumed to have a bearing on the issue were shown above to have no statutory authority, and thus they are not binding on us.  We are relying here on the idea that we must adhere to rules and regulations, and not just to statutes which have no regulation behind them.

During my e-mail response to Alex, I decided to call Ma Bell herself and ask them what the underlying law is for the federal tax.  The woman I spoke to at the business office in late December was able to find some printed material, and the first thing she read was something about it being "a contribution for the good of the federal government" or something similar (puleeze!), to which I said "Well, that's rather vague."  She put me back on hold to dig some more and returned with "It's called the federal excise tax.  It's a 102 year old tax law.  Actually, right now Congress is trying to repeal this tax."  I interrupted.  "The 3% federal tax?"  She replied "yes it is.  It's called a tax on talking.  It's a 102 year old federal excise tax on telephone service."  She also provided the identification of the repeal legislation in Congress - HR 3916.

Well, waddya know.  I was able to find that bill and here's how it starts off:

SECTION 1. REPEAL OF EXCISE TAX ON TELEPHONE AND OTHER
COMMUNICATIONS SERVICES.

(a) IN GENERAL- Chapter 33 of the Internal Revenue Code
of 1986 (relating to facilities and services) is amended
by striking subchapter B. [emphasis added]

Subchapter B is where sections 4251-4254 live, and thus it appears that we've hit pay dirt.  The bill was introduced on March 14, 2000.  There are other versions of the bill, however.  The second one there on the site was introduced in May 2000, and rather than just kill the tax, it phases it out 1% per year over 3 years.  It looks like this version passed in the House of Representatives on May 25, 2000.  Congress may have a multiyear plan to phase it out, but with no regulations behind it, I'm phasing it to zero effective immediately!.  To see the legislation, use the link below to pull up Thomas, then type H.R. 3916 in the search box at the top left part of the screen titled "By Bill Number".

http://thomas.loc.gov

My actions to become a non-taxpayer with regard to this tax

To become a non-taxpayer, one stops paying the tax in question.  However, it is prudent to notify the taxing authority, or in this case, the entity (phone company) acting as tax collector for the taxing authority (I wonder if AT&T and Verizon get compensated each year from the federal government for acting as tax collectors?) so that they know what you are doing and why.  Setting up a paper trail is wise, especially if the issue ends up in a legal venue down the road.  That in mind, I have included below the letter that I sent along with payment for the telephone bill.  I noticed later that the payment envelope says "please do not send notes or letters with your payment", so I called the business office and asked where I should also send the letter so that it would end up in my file.  I was given the Maryland address shown in the letter.  The man at the business office who gave me that address entered into some discussion on the issue, and warned that the unpaid amount might show up as an overdue amount on future bills.  You can see from the letter's last paragraph that I intend to furnish them with this letter on a periodic basis, just to make sure they are always aware of what I'm doing.  However, Alex told me in a December 22 e-mail message "I've composed a letter covering the bases on 4251, though I've only needed to forward this letter to my LD carrier.  My local carrier merely needs a monthly call to delete the applicable balances."  I am not a big fan of telephone calls when it comes to dealing with agencies on tax or legal issues, because the conversation is typically not part of "the record".  I will be using a similar letter with AT&T when the next bill arrives, so that my long distance carrier also knows that I am no longer a 3% federal tax payer.  I'll add that letter below when it is generated.

					Arthur L. Farnsworth
					c/o 2100 Sterners Road
					Green Lane, Pennsylvania
					Acct. XXX XXX-XXXX-XXX XXX
					05 January 2001

Verizon Imaging Center
P.O. Box 1915
Beltsville, Md.  20705

Dear Sirs:
    I am sending this letter starting with my January 2001 telephone bill
to explain the difference between the amount paid and the total amount
due.  I have conducted research into the various federal charges and
taxes that appear on the telephone bill, and I have found that there is no
lawful requirement for the payment of the three percent federal tax, which
is identified in three places on the telephone bill as "Federal tax".  I
present below some of the details from the tax law that have lead me to this
conclusion.

        1) The statute that implements the three percent federal tax
           is found in Subtitle D (Miscellaneous Excise Taxes) Chapter
           33 (Communications) Section 4251 (Imposition of Tax) of
           the Internal Revenue Code, also known as Title 26 of the
           United States Code.  26 U.S.C. 4251 has no legislative
           regulation to support it, thus making the statute, and
           therefore the tax, benign.

        2) Confirming that the information in item 1 above is correct
           was a December 2000 conversation with the local Verizon
           business office.  The woman I spoke with revealed that the
           tax in question is "called the federal excise tax.  It's a 102
           year old tax law.  Actually, right now Congress is trying to
           repeal this tax."  When I asked if she was referring to the
           3% federal tax, the reply was "yes it is.  It's called a tax
           on talking.  It's a 102 year old federal excise tax on telephone
           service."  She also provided the identification of the repeal
           legislation in Congress - HR 3916.  A review of that legislation
           confirms that the I.R.C. sections to be modified are in Chapter
           33 Subchapter B, which contains sections 4251-4254.

    You should know that I am not a tax protester, and that I pay all taxes
which I am required to by law.  My research has shown that I do not have to
pay the 3% federal tax on communications, and thus I will no longer pay it.
If my research is incorrect, I would appreciate you providing me with any
and all information to that effect at your earliest convenience.

    Since I usually pay my telephone bill with cash at a local supermarket,
this letter will not accompany each month's bill.  I will include it every
six months, to ensure that you have it in your records.



					Sincerely,
					/s/

					Arthur L. Farnsworth

03 March 2001 - Verizon replied in a letter dated February 7, 2001.  They claim therein that they are required by law to provide the Internal Revenue Service with the names and addresses of customers who refuse to pay Federal Taxes.  Verizon employees must take lessons in letter writing at the same school as I.R.S. employees, as neither group has learned that you sign letters!  They provided a form to use - you can view one I just finished filling out here: (front, rear).  The VarTec/other carrier amount is for the 10-10-811 service I used a few times for long distance calls, and I also deducted the two cents they tacked on as a late charge for my non-payment of federal taxes from the last bill.  Note two things from the form - on the back, I've reproduced the guts of my explanatory letter above; and on the front, they identify themselves in the middle of the form by the first dollar amount blank as "Bell Atlantic", and not as "Verizon".  I point that out not as evidence that they're slow in updating their stationery, but rather as proof that this form has been around since before September 2000, which is when the switch in name occurred.  In other words, I'm not the first customer of theirs to stop paying the federal tax.

22 April 2001 - The latest telephone bill arrived in the mail Friday, and much to my delight, Verizon has applied credits to the account for the federal taxes I did not pay with the December 2000 and January and February 2001 bills.  Recall my elation above about the fact that Verizon had the form to provide, because it proved that I was not the first one to stop paying this tax.  The existence of the form was almost enough by itself to convince me that the 3% federal tax on the telephone bill need not be paid.  Well, I sincerely doubt that Verizon would issue any credits if they believed that the law required customers to pay the tax.  I suspect that this matter went by their legal people a long time ago, leading to the creation of the form.  The credits would certainly seem to prove the point here, that there is no lawful requirement to pay the 3% federal tax on telephone bills.  Are you going to start saving "a buck or two" as the stupid advertisement says, not by using 10-10-XYZ, but by no longer adding the extra donation amount to your phone bill payment?

26 April 2001 - Upon suggestion from a friend who I made aware of this situation, I am sending in a letter addressing their original letter (see 03 March 2001 above).  Remember that they said "We are required by law to provide the Internal Revenue Service with the names and addresses of customers who refuse to pay Federal Taxes"?  Well, it would be nice to see that law, huh?  My letter asks for the law, and also suggests that rather than continue with this silly system whereby I have to send in a monthly request for credit (which leads to the addition of late charges to the bill), they simply stop billing for the 3% federal tax amount.  No 3% tax charged, no forms to send in, no late fees.  Makes sense to me, but if it does with them we will have to wait and see.

13 May 2001 - Verizon's response (unsigned again) arrived.  They apparently can not answer my question - "What law requires Verizon to send the names and addresses of customers who refuse to pay federal taxes to the I.R.S.?"  They are going to adjust the account to kill the late fees, but they don't say whether or not they're going to continue with the same illogical billing method - charging the federal tax then crediting the tax and late fees later.  Their response is annoying.  First, one would think that if Verizon indeed has imposed upon it the above mentioned requirement, they would know what it is and be able to provide a statutory cite.  Don't their legal people know?  Are they acting as most Americans act in the payment of federal income "taxes" - filling out forms and sending in money, not because they've had a copy of the applicable law shoved under their nose for perusal, but rather because everyone else does it?  Is Ma Bell saying they have to send names and addresses to the I.R.S. because they "just heard it somewhere"?  Come on!  I don't like having to send a form each month to a separate address to get a credit for the federal tax amounts, either.  It would be one thing to be able to slip the form in the payment envelope each month (I actually prefer paying at a local market with cash), but to incur a second 34 cents postage each month to mail the form pretty much cuts the tax savings in half.

Oh - latest AT&T bill arrived recently.  Unlike Verizon, they have not credited the federal tax amount from last time and have included it as an unpaid balance due amount on the new bill.  I suppose I need to send them the explanatory letter again.

14 May 2001 - A fellow Bucks County man named Gene is pursuing the same course with Verizon.  He asked them just what phone company services are allegedly subject to the 3% federal tax.  Their is letter of response to him is short and sweet, but evidently answers the question.

21 May 2001 - After considering further Verizon's "Sergeant Schultz" response of 13 May -- "We know nothing!  NOTHING!" -- I have decided that rather than continue paying 34 cents in postage each month to send them a form detailing the amounts of a tax I'm not paying because 1) no law requires it, and 2) it ceased to be in 1965, I'm just going to tell them once and for all via a two-page letter (page 1, page 2) that I will no longer be paying any tax or sending them any forms.  AT&T apparently didn't get my first letter to them because I included it with the bill.  I was given an El Paso, Texas address today to send it to, which I did.  We'll see if they, like Verizon, come to see the truth regarding the 3% federal tax on phone bills.

20 June 2001 - Gene, mentioned in the 14 May 2001 entry above, was able to get refunds of the 3% federal tax on a business account going back to 1998 simply by making a call to the phone company.  I tried to do the same, and was told "No - and you have to keep filing the monthly forms."  Last month I mailed a letter telling Verizon that I'm no longer going to file the monthly forms, but I decided to break my rule and send one last form in - you see, I've got phone bills going back to April 1999, and I've paid $27.47 in federal taxes since then.  I itemized all the tax amounts in a spreadsheet and attached it to one of Verizon's refusal forms.  Since the business office rejected my verbal request for refunds for taxes paid in the past, I'm going to submit this request via mail and hope for the best.  I may not get refunds going back to 1998 (period supposedly dictated by statute of limitations), but I will take what I can get.

Hats off to Gene for also getting some useful information out of Verizon regarding their alleged requirement to file these "Refusal to pay federal tax" forms with the I.R.S.  Recall that Verizon had simply recommended consulting with the I.R.S. when I asked for the law that required them to send names and addresses to the I.R.S.  Well, Gene got a letter back, which you may read here, which includes a regulation cite.  Although a bit hard to read, Verizon says the following in the "Results of Bell Atlantic's Investigation" paragraph of the letter: "Section 601.403(c)(2) of the I.R.S. Statement of Procedural Rules requires the collection agent (i.e. Verizon) to report persons who refuse to pay the tax to the I.R.S.  The subscriber's name, address, telephone number and the amount of refusal is reported to the I.R.S. with the quarterly filing federal excise tax return Form 720.  The I.R.S. will assess the tax directly against the person to whom the services were provided."  The Statement of Procedural Rules is another name for 26 C.F.R. Part 601.  Firing up my tax CD-ROM and calling up regulation Section 601.403, I discovered "Sec. 601.403 Miscellaneous excise taxes collected by return [Removed]."  Removed does not mean repealed.  Looking through the treasury decision cites for this section reveals "Removed by T.D. 8685".  Luckily, my CD-ROM includes this Treasury Decision, and in paragraph 9 therein one finds "In addition, the rules set forth in sections 601.104(a)(5) and 601.403(c)(2), relating to persons required to collect and pay over tax, have been combined, revised, and moved to part 49 as section 49.4291-1."  So, we're told to go to Section 49.4291-1 for the regulations we're concerned with.  Here's that section:

So what does this tell us?  Every person (Ma Bell) receiving any payment for communications services (phone bill) on which a tax is imposed upon the payor thereof (us) under Internal Revenue Code Chapter 33 (see The tax law imposing this tax - statutes, above) shall collect the amount of the tax from the person (us) making that payment.  Simpler put, Section 4251 of Chapter 33 imposes a tax on communications services that we pay for, and since we make payment for those services to the phone company, the phone company is told here that it is a tax collector for Uncle Sam.  Continuing, we see that if one refuses to pay the tax, the collecting agent (phone company) is required to report to the I.R.S. district director the name and address of the person refusing to pay, so that he can proceed directly against the person refusing.

At first glance, it sure looks like this regulation requires Verizon to send in names and addresses of people who refuse to pay the federal tax, but nowhere does it say that I have to fill out a form and send it to Verizon.  However, the authority provided at the bottom of the regulation is a Treasury Decision, not a statute, so this regulation is not legislative and thus is not binding upon you, I, or Verizon.  Also, I say "let the I.R.S. proceed against me to try and assert the amount of the 'tax' due!"  There's so much evidence, as presented on this page, that the "tax" is bogus that the I.R.S. would never win an argument to the contrary.

Here is a summary of what I have presented thus far on this Phone Taxes page:

• There is a 3% tax being charged on local and long distance telephone service.
• The tax is imposed in the tax statutes at 26 U.S.C. 4251.
• The underlying regulations at 26 C.F.R. 49.4251 are not legislative in nature, and say that the tax was ended in the year 1965.
• Congress is considering legislation to phase out the "tax", perpetuating as they do with the federal income tax the myth that the tax truly and legitimately exists, and that they have our welfare at heart, proven by the fact that they're reducing or repealing the "tax" in question.
• Telephone company Verizon has a mechanism (form) in place for people refusing to pay the "tax".
• Telephone company Verizon is willing to credit "tax" amounts charged upon submission of the form.
• One may obtain refunds of tax amounts previously charged and paid, although how far back one may seek refunds is, as with federal income taxes, limited by a statute of limitations.  To go back further would probably require filing a lawsuit charging the telephone company and/or I.R.S. with fraud.
• A regulation exists, although it is not legislative in nature, requiring telephone companies to provide the names and addresses of persons refusing to pay the "tax" to the I.R.S., so that the I.R.S. can then seek to directly proceed against the person to obtain the "tax" amounts not paid.

17 August 2001 - Gene called recently to say that a friend got a copy of a Congressional Research Service report that states that legislation was passed that made the 3% tax permanent.  Needless to say, I decided that some additional research was warranted.  Here's what the C.R.S. report said in relevant part:

Federal Telephone Excise Tax.  The federal telephone excise tax on long-distance service was first established in 1914 as a temporary tax necessitated by World War I.  It has been repealed and reinstated several times since then.  The tax was made permanent by the Revenue Reconciliation Act of 1990 (Public Law 101-508) and is currently assessed at a rate of 3% on local and long-distance telephone services.  Monies collected from this tax are not kept by the telephone companies.  They are forwarded to the U.S. Department of Treasury.  The Telecommunications Act of 1996 (Public Law 104-104) did not alter this tax.  Legislation (Senate Amendment 2198 to S. Con. Res. 86 and H.R. 3648) has been introduced in the 105th Congress to repeal this tax.

We logically want to find out what Public Law 101-508 says.  I went to the Thomas service at http://thomas.loc.gov/ to look that law up:

Public Law 101-508 - "A bill to provide for reconciliation to section 4 of the concurrent resolution on the budget for fiscal year 1991".  It was passed into law on November 5, 1990.  Its abstract as introduced is "Sets forth budget reconciliation requirements with respect to the FY 1991 Federal budget."

Here's the relevant summary text of this lengthy legislation:

Yuck.  That supports what the C.R.S. report says.  P.L. 101-508 is identified by Thomas as starting out as H.R. 5835, so I next went there to find the legislation text, of which I've included the relevant part below.

So, what does Section 11217(a) actually do?  It amends Internal Revenue Code Section 4251(b)(2), changing it from this...

to this...

The implication is that because the statute was amended to remove the language that reduced the tax rate from 3% to 0% after 1990, the tax now continues at a 3% rate.  If all we had was a statute, then I might agree that that is true.  Recall from the early part of this page that there are regulations behind the statutes, though, and that where statutes are by nature general, regulations are specific.  Here again is the relevant part of the regulation:

I checked the April 2000 and April 2001 versions of the Code of Federal Regulations online, and both, as well as what I believe is the 1998 version from my tax CD-ROM, say the same thing - the tax ended in 1965.  Congress may have modified the statutes via H.R. 5835 (which became Public Law 101-508), but it appears that the Secretary did not modify the underlying regulations as is his duty under 26 U.S.C. 7805(a).  I did point out above that regulation 49.4251 is not legislative, and perhaps one could argue that Congress only needed to modify the statute, and that a modification of the regulation was not needed to make a valid change in the tax law, but I would, if necessary, argue that something's amiss if a statute and its underlying regulation, legislative or not, contain conflicting information.

Let me restate the apparent conflict: 1) a statute exists that imposes a 3% tax; 2) the statute used to contain language that specified the tax rate as 0% after a certain date, but has been amended to remove that language; 3) the underlying regulation still specifies a 1965 expiration date, but the regulation is not legislative.

23 August 2001 - I woke up this morning with the above conflict on my mind, and here's the resolution that I came up with.  To restate, there are three types of regulations - legislative, interpretative, and procedural.  For an explanation of these three types, look at what the I.R.S. told Irwin Schiff in a letter.  My idea today was "Problem - the regulation that says the tax ended in 1965 is not legislative, so it is not binding on me.  But, even as an interpretative regulation, it is where the I.R.S. would go to get more detail on the statute 26 U.S.C. 4251.  The regulation is not there to simply take up space!"  If the regulation were legislative in nature, then I believe it would have been amended along with the statute back in 1990.  The fact that it was not is an eyebrow raiser.  The regulation being interpretative in nature means that it's "not as important", and I doubt that the I.R.S. would want attention raised to the fact that it still says the tax ended in 1965.  However, facts are facts - the statute, where one goes for general information, imposes a tax; and the regulation, where one goes for specific information, still says no tax is imposed for bills after July 1, 1965.  We are not to ignore the regulation because it is interpretative - it still provides details about the statute.  It's just that if the regulation imposed a requirement, like "The person responsible for the payment of the tax shall file Form 1234", one could reply with "No way am I filing Form 1234, because the requirement to do so is not contained in a legislative regulation!"  I hope I've made the point clearly.  I realize that it's a bit of a stickler, and that others might not agree with me.  I'm always open to other points of view, as evidenced by the Feedback page of this site.

More on the conflict - I had to think about this again while drafting my P.U.C. Informal Complaint (see below), and figured out why the statute and regulation are not in conflict.  Here's the text explaining that from page 3 of my Informal Complaint:

The statute and regulation here appear to be in conflict -- the statute says the rate is 3%, while the regulation says the rate is zero -- but they are not.  The statute does not include any reference to a date, such as "Starting on such and such date and continuing thereafter, the rate is 3%&" - it just establishes the rate.  The regulations, which again provide details regarding the statute, have no conflict with the 3% rate established in the statute - they just tell us that no tax is imposed after July 1, 1965.  They don't say the rate is 0% (which would present a conflict), but rather "no tax is imposed on amounts paid on or after July 1, 1965."

Do you get it?  The statute establishes a 3% tax rate, but the underlying regulation says that the tax (3% or whatever rate) is not imposed after 1965.  I think I've now successfully proven this point.

If you look at the revision history of the statute, you find that there are many annotations citing Public Laws from 1958 through 1990 in which the rate was fiddled with.  However, it looks like they have not changed the corresponding regulations in some time.

29 August 2001 - My original spreadsheet/form request for a refund of June 20 must have gotten lost.  I called the business office and they had no record of a credit to my account.  I sent the whole thing down to Beltsville again, this time via facsimile.  I received a response very quickly.  Verizon again says I have to submit one of their forms each month, and that they won't credit amounts for months for which no form is received.  I also sent a facsimile request for a copy of their written policy "requiring" customers to file a form on a monthly basis.

The next day, I received a Summary of Dispute, which includes a cover letter and copies of recent correspondence between Verizon and me.  They "give me" 10 days to file a complaint with the Bureau of Consumer Services (at the Pennsylvania Public Utility Commission).  I'm tired of their tired old response "you must file a form each month to get a credit", and so I have prepared a six page informal complaint to the P.U.C.  Gene says that responses from the P.U.C. typically take 30 days.

05 September 2001 - A copy of the Verizon policy arrived yesterday.  I did not expect to get anything, figuring there was no actual written policy, but I did.  I must say that this policy, as provided, sure looks like something that somebody just whipped up and printed out.  The "P" word does not even appear therein - I would have expected something at the top like "Policy 01.23 - Handling of Customer Refusal to Pay Excise Taxes".  Oh well.

24 September 2001 - The Pennsylvania Public Utility Commission "response" to my informal complaint arrived over the weekend.  They did a total punt on the issue!  I phoned them this morning, asking for Shirley Leming to get additional information.  A man identifying himself as Jerry took the call and asked for the case number.  He asked "From what I'm seeing here, you were sent a formal complaint form to file a formal complaint?"  "Yeah, she punted" was my reply.  I went on to explain that Mrs. Leming's letter was only 2 paragraphs in length and did not contain any responses from Verizon.  I asked if the P.U.C. had even contacted Verizon, and Jerry told me that when I spoke with the investigator (a phone call back at the beginning of September) I "wanted formal forms to file a formal complaint."  I said "Not at all.  My understanding was there were two stages to this whole thing", and informed him that the informal complaint I submitted clearly identified itself thusly.  I continued by saying that I didn't believe that one could skip the informal process, and Jerry cut in with "Yeah, yeah, you don't have to do the informal process if you're going to file a formal complaint."

Break in narrative with an open question to Jerry - why the heck do you have an informal complaint then?  Gene told me that the formal complaint was something filed if the outcome of the informal complaint was not to one's satisfaction.  Isn't bureaucracy fun?

I started hearing a woman's voice in the background -- a supervisor perhaps, or had the mysterious Mrs. Leming been there all the time? -- then Jerry put me on hold.  Obviously, I was asking questions that tripped their logic alarms.  Jerry came back on after about a minute, asking me to tell him a little bit about my situation.

I explained the gist of the 3% federal tax issue to Jerry, ending by telling him I was seeking either refunds of tax amounts previously charged or proof in the law that the tax legitimately exists.  His response came quick, but not too quickly that I could not hear Mrs. X talking in the background.  Maybe that voice was from another worker in an adjoining cubicle, but I have a feeling that if I had been communicating with him via the video phones that the phone company told us would be reality someday, I would have seen red lights flashing in the office - "warning!  warning!  Someone is calling in questioning a TAX!"

Jerry's suggestion - "Mr. Farnsworth, what you need to do is to call the F.C.C.  We don't have, uh, jurisdiction over that.  They should be able to help you."

I explained that it is Verizon that has been charging the tax, Verizon that has been refusing to refund the tax amounts, and that it will be Verizon

At this point there was a pause of some seconds, during which I could hear the mystery woman reading something out loud about federal taxes mandated by the federal government.  Jerry then parroted to me what the woman had just read to him.  He continued by stating "since it's a federal tax that is mandated by the federal government, you have to go to the federal government, which is the F.C.C."

I explained that the F.C.C. is not a legal venue, but rather an administrative body.  Mrs. X was feeding Jerry a continuous stream of replies in the background.  I reiterated that since it was Verizon making the claims, etc., it was therefore the P.U.C.'s responsibility to act on my behalf and challenge Verizon.  Jerry could only answer with "This is a federal issue" and give me the F.C.C.'s telephone number.

I made a quick consultation call to Gene to figure out what to do.  He suggested either demanding to speak with Mrs. Leming, or going right to the top, asking for a Mr. John Quain.  He proffered that a logical question to ask would be "If the P.U.C. is not the proper agency to which to seek redress for this issue (remember, Jerry said the F.C.C. could help me), then why did they send me the application form to file a formal complaint?

It's now after lunch, and I'm calling P.U.C. again.  A "Bob" answered the phone and gave me Mrs. Leming's direct dial number in case we got disconnected during the transfer (we of course did).  I next called Mrs. Leming on my own nickel and left a message for her to call me back.

26 September 2001 - Mrs. Leming called back, explaining that she returned my informal complaint because the type of matter I was seeking resolution on is only able to be dealt with at the formal level.  I told her about Jerry's claim yesterday that I had submitted not an informal complaint but rather a request for a formal hearing.  Her explanation was that Jerry is a new guy there.  Hmm.  Maybe someone should tell Jerry not to incorrectly pass off people to the Federal Communications Commission before going through the formal complaint process.  I will finish composing my formal complaint and send it out by the end of the week.  Gene has told me that a formal complaint hearing is like going to court - you appear before a "judge" who makes a ruling.  Should be interesting.

28 September 2001 - I finished the formal complaint and sent it to Harrisburg via certified mail this afternoon.  It does differ from the informal version, in that I removed the parts about Verizon refusing to provide the policy.  I also touched up some of the text describing the law, and consolidated three issue points into two.

25 October 2001 - I got a call from Verizon's lawyer this morning.  When I called him back the next day, he told me he requested and was granted a two week extension.  That means that the hearing is postponed two weeks to give Verizon two weeks more to prepare.  I guess that my situation is a bit more of a challenge than they're used to.  Anyhow, the follow up letter from the law firm indicates that their answer must be filed with the P.U.C. by November 8th.  He did hint that mediation might occur before/in lieu of the hearing, but I'm not sure about that.  We'll wait two weeks and see what happens then.

10 November 2001 - A copy of the filing by Verizon's law firm arrived today.  I must admit to being just a bit intimidated.  I've seen this type of document before, but those documents never had ARTHUR FARNSWORTH on them.  After the cover letter, there is attached a Notice To Plead.  It says that pursuant to two Pennsylvania regulations, if I don't file a written response denying or correcting the enclosed new matter with 20 days of the notice, the new matter may be deemed to be true.  Following that is Verizon's admission, which is a set of pages wherein Verizon either ADMITS or DENIES allegations or points that I raised in my complaint.  After that comes the New Matter - 3 pages of statements which Verizon's law firm is putting forward as factual.  At the end of their New Matter they ask that the Complaint be dismissed without hearing.  That threw me for a loop, because I thought a hearing was a matter of fact when a formal complaint was filed.  Gene recommended I call the P.U.C. and address the time limit and hearing dismissal matters.  I did so on 14 November, and was told that 1) I can safely ignore the "respond within 20 days or else" warning, and 2) Verizon's request for dismissal was refused and that a hearing has been scheduled for January 23rd.  I plan to review in detail and prepare responses for each of the New Matter points, so that I may successfully contest them at the hearing.  I suppose that Verizon's letter was meant to intimidate (which it did a little) and either therefore scare me into dropping the matter or have the P.U.C. drop the matter.  So sorry, Verizon, that neither of those two attempts were successful.  I will post the Verizon filing and commentary here in the near future.

26 November 2001 - Well after consulting with my friend Ken who's been through this kind of thing before (he challenges traffic tickets for the court practice), and looking at the relevant sections of the Pennsylvania Code (that's where the regulations are found), I prepared my Answer to New Matter.  First, though, let me share with you the material from the 10 November 2001 posting above.  There's a cover letter, a Notice to Plead, a four page Answer to my complaint (page 1, page 2, page 3, page 4), and three pages of New Matter (page 1, page 2, page 3).  I've omitted Lehman's Attachment A, which is a five-page Commerce Clearing House historical description of the statutes at 26 U.S.C. 4251; Attachment B, a one-page ETR Report pulled off the Internet describing how on November 29, 2000, President Clinton vetoed a telephone tax repeal; the affidavit whereby Verizon swears that the information presented in the Answer and New Matter is true under penalty of perjury; and the Certificate of Service.

My Answer to New Matter consists of a cover letter, the five page Answer to New Matter itself, Attachment A, a Verification, and a Certificate of Service.  In accordance with 52 Pa. Code Section 1.37, an original and three copies of all of this must be furnished to the Commission, and of course I'm sending a copy to Verizon's lawyer.

I don't know why the P.U.C. told me what they did, unless they want to screw me up, because the law governing the P.U.C. as presented above echoes what Verizon's lawyer said in his Notice to Plead - if I don't file a written response denying or correcting his New Matter within 20 days, the facts set forth in his New Matter may be deemed to be true.  That sounds like too much a chance to take, so I'm glad I followed Ken's recommendation and got an Answer to New Matter together.

14 December 2001 - Gene had suggested some time ago that I ask Verizon to prove that they have a lawful requirement to collect the communications excise tax.  For those of you familiar with legal proceedings, the term "discovery" should come to mind.  I searched through the three PDF files I downloaded that contain the relevant sections of Volume 52 of the Pa. Code to find out how the P.U.C. handles discovery, and found that 52 Pa. Code Sections 5.321 and 5.341 address the issue.  Here are the important parts of those two sections:

I would like to see if the I.R.S. ever really provided Verizon with a letter saying "Dear Verizon, In accordance with the following statutes and regulations, you are required by law to collect the communications excise tax and send it to us."  If they did, here

27 December 2001 - Verizon's lawyer has tried again to stop the hearing before it begins!  He filed a Motion for Summary Judgment (page 1, page 2, page 3, page 4, page 5).  The rest of the document is the 8 page Attachment A, the 4 page Attachment B, the 2 page Attachment C, the 2 page Attachment D, the cover letter, and the Certificate of Service.  He brings up his same tired argument ad nauseum, about Verizon's obligation to collect the tax being solely based on the statute 26 U.S.C. 4251, and tries to claim that there's no dispute -- Verizon admits to collecting the tax -- and therefore no need for a hearing.  Perhaps he's correct there, except then how do I get recourse?  Recall that it was Verizon that suggested I go to the P.U.C. in the first place!  About the only new point raised in the Motion for Summary Judgment is Verizon claiming in paragraph 16 that 26 U.S.C. 4291 and its underlying regulation also require it to collect the tax.  You can go way back to my Formal Complaint to find the material that describes how 26 C.F.R. 4291 is not a legislative regulation, that and other reasons making it inapplicable to the matter.  In other words, the lawyer has not put forth any arguments that require more research on my part.  I, on the other hand, have been in contact with a man from North Carolina who has been through this whole fight before.  He has suggested some juicy gems to obtain from the law library.  I'll present them at the hearing.

I had some extra time over the Christmas break, and was able to rather quickly prepare my Answer to Motion of Verizon Pennsylvania Inc. for Summary Judgment, with Attachment A and Attachment B (page 1, page 2).  I hope that the judge is convinced that Verizon's lame attempts to eliminate the hearing and thus continue to get away with large-scale fiscal extortion are not worthy of consideration.

19 January 2002 - A few significant events have happened since the 27 December 2001 entry - 1) Verizon's Response to Discovery arrived, 2) the letter from the I.R.S. arrived, providing in writing the status of the Communications Excise Tax form, and 3) I found out that the statutes dealing with this tax were repealed.  I'll describe each in turn.

1. Verizon's Response to Discovery - from the 14 December 2001 entry above, you see that I fired a letter off to Verizon's lawyers asking for some correspondence from the I.R.S. to Verizon directing Verizon to charge and collect the Communications Excise Tax.  I figured correspondence of that nature would surely include or identify extracts from the tax statutes and regulations requiring Verizon to do so.  Well, as you can read for yourself in the response letter, Verizon has never received such a directive from the feds (surprise!)  Lawyer Lehman just says that Verizon is complying with the law.  I had occasion to speak with Mr. Lehman on the telephone on Wednesday the 16th, and we discussed this a bit.  He likened the situation to that of any small businessman opening a new business - the businessman charges and collects sales tax as a matter of fact, because he "knows" that the law requires businesses to charge and collect sales tax.  Huh?  Maybe that's what he and many other people would do, but isn't that to a large part why the fraudulent federal income "tax" continues on, generation after generation?  It's the popular perception problem, and it's what I attempt to combat in my Income Primer and my Income Brochure.
2. I had looked in Section 602.101 of 26 C.F.R. and found that the table there identified the form bearing Office of Management and Budget (O.M.B.) number 1545-1075 as the proper form to use in conjunction with the taxes of regulation sections 49.4251-1 and 49.4251-2 (the Communications Excise tax).  I made a number of calls to Washington, D.C. to get information regarding the status of this form.  The O.M.B. Forms office told me that records showed that the form I was seeking was Department of Treasury, Internal Revenue Service agency form 8806, Computation of Communication Taxes, and that it had expired in 1991.  I was referred to someone in the Clearance Office at Treasury for the definitive word on the status, and she told me that the form is not in the database.  She sent me to the I.R.S, where I learned that their notes from 3/8/89 indicate that the form was never issued to the public.  I asked for something in writing, and received a letter dated January 9, 2002.  They echo therein what I learned on the telephone, then suggest that although the form is not in existence, there is a valid replacement.  Well, it is not a valid replacement, because to be valid, the O.M.B. number (1545-0023) of Form 720 would have to appear in the above-described regulation table, and it does not.  All of this boils down to the fact that there is no lawful form in existence for the tax described at 26 C.F.R. 49.4251-1 and 49.4251-2, but that makes sense, since the tax itself is not in existence.
3. The statutes dealing with this tax were repealed - I was doing some more review this past week of the material from the man in North Carolina, and came across a mention in his letter to AT&T that the statutes had been repealed.  Since Verizon has been poo-pooing my reliance upon the regulation and stating that their authority is found solely in the statutes, I figured that proving the statutes were repealed would be the final nail in their coffin.  So, I fired up my tax law CD-ROM, and found under Section 4251 a link to background notes.  Wow!  In there in big bold letters was the word REPEAL!  All of Chapter 33 Subchapter B was repealed by Public Law 90-364 back in 1968.  I made another trip to the Villanova law library yesterday to look this law up so that I could bring it to the hearing.

During my conversation with Verizon's lawyer on the 16th, he said he was going to be at the judge's office in Philadelphia the next day, to inquire about the status of the Motion for Summary Judgment.  I became concerned that should the hearing be cancelled (i.e. the Motion ruled upon in the affirmative), I would never get a chance to present this latest and greatest round of evidence.  I telephoned the judge's office, and found out from her secretary that the hearing was cancelled, pending consideration.  More specifically, it was cancelled pending the Motion for Summary Judgment, and could not be held with that Motion outstanding.  The judge had not yet issued her ruling.  I expressed the need to get the new matter in before she did so, and was told to file a Supplement to Answer to Motion for Summary Judgment, which I prepared last night for mailing on Monday.  The secretary told me that the judge will take my latest material into consideration before ruling on the Motion for Summary Judgment.  A cancellation notice regarding the first hearing will arrive, then the judge will rule on the motion, and then a new hearing notice will be sent, if she decides to rule that way.  I really do not see how she can rule out a rescheduled hearing, except to go for summary judgment, but in my favor.  I mean, I have now proved that:

1. there is a regulation saying the tax ended in 1965
2. no currently valid form for the tax exists, and
3. the statutes dealing with the tax were all repealed in the late 1960's.

Verizon has no leg to stand on, as I see it.

Here's my Supplement to Answer to Motion of Verizon Pennsylvania Inc. for Summary Judgment, and Attachment A, Attachment B, Attachment C, Attachment D, Attachment E, Attachment F, Attachment G, Attachment H.

25 January 2002 - Woo hoo!  Arriving in the mail today was a Hearing Continuation Notice.  It appears to be a combination of the cancellation notice I was told by the judge's secretary to expect, and the rescheduling notice she told me would be sent if the judge did not make a summary judgment.  This is another small victory.  Now I'm really curious to see what, if any, response Verizon's lawyers make.  They either have to find a hole in my research and exploit it, or find another way in the P.U.C. regulations to do an end-around and kill the hearing.

30 January 2002 - I called the judge's office to get a better understanding of the meaning of the Hearing Continuation Notice and to find out if she had ruled yet on the Motion for Summary Judgment.  The Notice really is the cancellation notice I was told to expect; yes, the judge received my latest material; and no, the judge has not yet ruled on the Motion.  We just sit tight now and wait for her ruling.

18 February 2002 - The judge's ruling arrived via certified mail this past Saturday.  Being a pessimist when it comes to matters of American legislative and judicial bent, I was not surprised that the judge took the only out she had to avoid my slam dunk - she dismissed the complaint for lack of jurisdiction.  To be fair, I don't fully disagree with the idea that since it's a federal tax issue, the Pennsylvania Public Utility Commission does not have jurisdiction (they don't have the power to control the applicable statutes and regulations).  But, as I've purported before, Verizon is under the P.U.C.'s jurisdiction, and Verizon is the entity charging me the tax amounts.  If the I.R.S. was sending me communications tax bills directly, then it would be obvious that the P.U.C. is not the proper venue before which to argue the matter; but the tax is being charged, in violation of the law, by Verizon.

The cover letter says that if I do not agree with the decision, I have twenty days to file an exception.  I might do this, arguing my point from the paragraph above.  I've gotta think about this a bit.  Plus, what does this mean now with regard to me being charged and paying the tax amounts on the phone bill?  I don't intend to start paying again, not with the clear proof I have that the tax is defunct, but I wonder if Verizon is going to look at this as a victory of sorts and start adding late charges to my phone bill again.  Time will tell.  Anyhow, here's the six page judge's decision (page 1, page 2, page 3, page 4, page 5, page 6).

21 February 2002 - I sent my exception in today.  In a nutshell, I tell the Commission that it does have jurisdiction, because Verizon is acting unlawfully, charging and collecting a tax that does not exist.  There is no more debate, if there ever was, that the tax does not exist - I've proven beyond the shadow of a doubt that it does not.  The whole issue is the phone company charging and collecting a tax which does not exist.

25 February 2002 - Today I fired off an e-mail message requesting help from my state representative.  I've provided him with a summary of the case, and asked him to make an inquiry with the state Attorney General's office to try and get the real reason that the Consumer Advocate's office -- an office under that of the A.G. -- is blowing me off.  On a more general level, I'm encouraging him to help me do whatever it takes to stop this fiscal extortion of Pennsylvania citizens to the tune of $80 million per year.  Even if the P.U.C. drops the ball in the end by responding to my Exception with "we agree with the judge that we don't have jurisdiction", maybe I can get the state government to stand up for its citizens.  Cross your fingers and pray.

04 March 2002 - Verizon's law firm sent me a copy of their reply to my Exception.  Read it for yourself here (page 1, page 2), then see if you agree that this is stupid.  Their filing is titled "Reply to Exceptions filed by Arthur Farnsworth", and the first sentence says "The purpose of this letter is to advise the [P.U.C.] that Verizon ... does not intend to file Reply Exceptions in connection with the above-captioned proceeding."  Hello!  Is this like sending someone a Christmas card that tells the recipient not to expect a Christmas card that year?  Duh.  I filed my Exception with the P.U.C., not carbon copying the judge, because the regulations say it goes to the Commission.  Lawyer Lehman carbon copied the judge on his [not a] Reply to Exception.  Anyone else agree that he's cozying up to the judge?  She's out of the loop now anyhow, unless the commissioners agree with me that the P.U.C. does have jurisdiction, at which point she'd get the case back.

I've begun early conversations with an attorney on this matter.  I feel it will make my case stronger to have one of the law brethren agree with my research.  Time will tell what comes out of this.

19 March 2002 - I received a carbon copy today of the letter my state representative sent to the Pennsylvania Attorney General.  I'm quite pleased with what he wrote.  Let's hope that this will get something done.  No word yet from the P.U.C.

26 March 2002 - Received a return call from the P.U.C. on what to expect from them and when to expect it - "All Reply Exceptions are due to the Commission by March 18th.  After that date, it usually takes 30 to 60 days 'till the Commission will make their decision."  I was also told that the form of the response will be an "Opinion and Order".  If I'm not happy with that, I may file a Petition for Reconsideration.  If I'm not happy with that, I can move on to the Commonwealth Court.

28 March 2002 - Seems like this page gets updated every day!  The Pennsylvania Office of Attorney General drafted a short note to my state representative, acknowledging receipt of his correspondence on my behalf.  They're sending my matter off to the Public Protection Division, whatever that is.

19 April 2002 - Public Utility Commission final word arrives via certified mail.  It's their Opinion and Order (page 1, page 2, page 3, page 4) dealing with the Exception I filed.  Like A.L.J. Chestnut, they point out that in order for the Commission to have jurisdiction, the Complainant "must identify acts of the Respondent which violate the Respondent's duty under the Public Utility Code or the Regulations or Orders of the ommission."  I never showed that, because as far as I know, Verizon is not breaking any of those specified codes or rules.  They are, however, breaking the law.  Maybe the Commission is right in dismissing.  What it means, though, is that the state attorney general's office is the appropriate place to plead my case.  Our commonwealth's top cop will hopefully pursue this earnestly.  I told my state rep. that the P.U.C. had dismissed the case, stressing that it's now more important than ever for the attorney general to do something.  Hopefully, he will.

10 May 2002 - The FOX station here in the Philadelphia area has an "undercover tip line", which they invite you to call if you've got a juicy story for them to investigate.  I'd love for them to help investigate the $80 million annual ripoff of Pennsylvanians, so I left a message regarding the federal Communications Excise "Tax".  I hope they return the call.

21 May 2002 - Still waiting for the lawyer friend of a friend in Philadelphia to get back to me.  I met with him earlier this year about filing suit.  I'm also still waiting for something substantive back from the Pennsylvania Attorney General's office.  In a letter date May 2 to my state representative, the senior deputy attorney general says "Depending on the circumstances it sometimes takes a substantial amount of time in order to attempt to resolve particular problems.  After our efforts have been completed we will advise you of the result."  Huh?  Don't you think that office would want to talk with me to get more information?  This might be their way of burying it, but since I filed the inquiry through my state representative, I'm of the opinion that it'll be harder to do so than if I had just contacted them directly.  Wait and see, shall we.

Still nothing back either from FOX news' undercover tip line.  Maybe I'll call 'em again.

29 May 2002 - I am reading a good book, How To Represent Yourself in Court, to prepare myself for the upcoming civil complaint against my credit union, and discovered something called "concurrent jurisdiction".  It's the idea that a state court does have jurisdiction in the case of a dispute involving a federal law (which otherwise would have to be heard by a federal court), if the state court has venue (i.e. principal place of business of defendant and offense are within the state), personal jurisdiction (defendant is from the state), and subject matter jurisdiction, as defined by state statutes.  I include this brief note because I realize now (sigh) that I could and should have argued this fact in my P.U.C. pleadings.  The P.U.C. kept saying it had no jurisdiction because federal excise tax statutes and regulations were involved.  Well, that's true, but since I'm in Pennsylvania, Verizon does business in Pennsylvania, and the offense took place in Pennsylvania, a Pennsylvania state court (and I gotta think the P.U.C. as well) can, based upon concurrent jurisdiction, hear the matter.  Too bad I learned this too late.

05 June 2002 - Some potential good news from AT&T the other day.  After asking them if they have a form that I can file in lieu of writing a monthly letter (no), I asked if there was a procedure in place for other charges.  The woman I spoke with said yes, and that she'd include the information with the sample letter she's sending me to use for the Communications Excise Tax.  The only other charge on my AT&T bill that might apply here is the Universal Connectivity Charge.  I guess I'll find out soon enough, which means you'll find out shortly thereafter.  More money to be saved each month?

Also, last week I decided to reduce the risk of Verizon disconnecting my service (even though I've been advised by colleagues that Verizon cannot do so for refusal to pay tax amounts) by sending to the Beltsville, Maryland office a separate refund request form for all outstanding bills since April 1999.  Recall that on 21 May 2001 I decided I would not send any more forms in, because there's no requirement to do so.  While I wait for action on the lawyer or attorney general angle, I'm going to go back on my position and send the forms in.  I barraged their office with a thirty-three page facsimile!  They want forms?  Well, they got 'em!

Verizon sent me a letter dated May 28th acknowledging receipt of my request forms (9 for the year 1999, 11 for the year 2000, 8 for the year 2001, and 5 for the year 2002), in which they say they'll begin processing adjustments, even for the previous years.  This is important!  It means that you should save your old bills if you plan to request refunds using the procedures on my "How To Get a Phone 'Tax' Refund" page.

13 June 2002 - I decided to call AT&T again, since I've not yet received the information from June 5th.  I had a great conversation with Colette, who recommended I send a letter to the Billing Error Specialist Team in Massachusetts, asking them for their procedure to request refunds.  We digressed on the federal tax issue a bit, and she was interested in federal income taxes (specifically, not paying them).  I provided her with the U.R.L. of my Web site.  Gotta keep spreadin' the news!

21 June 2002 - The latest bill from Verizon (page 1, page 2) arrived Monday.  I'm elated to report to you that Verizon has credited my account for all federal Communications Excise "Tax" amounts going back to April 1999, as I requested.  They gave me $43.18 in credits!  So, I have successfully proven that one can claim refunds of past and present "tax" amounts improperly charged.  What about the other side of the coin, though?  What about getting rid of this once and for all via the legal system?

I'm glad you asked. Yesterday there came in the mail a letter from the Bureau of Consumer Protection in Philadelphia, which is a division of the Office of Attorney General.  This was in response to my getting the A.G. involved via my state representative.  The B.C.P. must have written to Verizon about the issue, and Verizon's lawyer sent them a reply.  The B.C.P., in its letter, asks me to respond to the lawyer's letter within 15 days.

It's essential that the Attorney General take this case on.  This taking of multiple billions of dollars from the pockets of Americans each year must stop.  I say, let's start here in Pennsylvania!

28 June 2002 - Two things to report today.  First, I finished my response letter (page 1, page 2, pdfe 3) to the Bureau of Consumer Protection.  Second, AT&T got back to me in a letter of response to my request for an exact procedure to follow to obtain from them monthly tax credits.  I didn't get a toll-free facsimile number, but at least they're willing to give me the credits.  I'm going to make some slight modifications to the Verizon form and use it with AT&T.  The details are over on the How To Get a Phone "Tax" Refund page.

29 June 2002 - I sent in a fifteen page facsimile this morning to AT&T, using the form I developed.  I'm asking for refunds starting with March 2000, which is the oldest bill I have on file.  I expect $18.35 in credits to my AT&T account.

09 July 2002 - A victory with AT&T!  A letter arrived over the weekend informing me that AT&T is giving me "tax" credits as requested, but only for the past 18 months of bills.  So, I won't get the full $18.35 I requested, but at least AT&T is willing to go back to older bills.  I'll post the bill showing the refunds when it arrives.

17 July 2002 - The AT&T bill showing refunds arrived.  I'm not happy to have received only $1.91 of the $18.35 I requested in refunds, but since it's not my problem that their billing system only maintains the past 18 months of bills, I have no intention of paying any of the outstanding amounts.  In the interest of having my account balance zeroed out, I'm going to find out if I may mail them copies of the older bills for credit.  It's a bear getting through to a human being with them!

26 July 2002 - Legal action: Pennsylvania Attorney General Bureau of Consumer Protection pretty much told me in a letter dated 17 July 2002 that they can't help me.  I then tried the Criminal Investigations Division, where I learned that the A.G. prosecutes crimes committed by state employees, but I was referred to the Civil Law Division Torts Litigation Section in Philadelphia.  The man there that I spoke with said that a district attorney might be the proper avenue, but when I asked if there was any appropriate division within the Office of Attorney General, he recommended the Office of Consumer Advocate, because they can file complaints against utilities with the Public Utility Commission.  If you refer back to the 25 February 2002 entry on this page, you'll see that I've already been there.

Wow!  I just had a great conversation with Ms. Diane Desmond in the Office of Consumer Advocate.  She had interoffice e-mail regarding my case from back in February, which indicated the then disinterest being based upon my sole reliance on the regulation ending the tax in 1965.  I filled her in on the other, newer facts backing up my position, and she seemed very interested.  They are going to pull all the P.U.C. pleadings and have their C.P.A. tax attorney look at it all next week.  I also learned that that office can intervene and initiate actions both in the P.U.C. and the courts, although I was told that if it came down to going to federal court to seek refunds, the Office of Consumer Advocate couldn't do that.  She told me my enthusiasm on this was infectious, and was impressed with the amount of research I've done.  This may still end up as a dead end, but today's phone calls were fruitful and inspiring - the bus is rolling again!  Hop on board, why don't you?  While I'm still going at this from the legal end, you can safely obtain refunds of this "tax", using the procedures on the How To Get a Phone "Tax" Refund page.

Oh - a letter arrived from AT&T today, telling me that they'd be happy to issue credits for bills older than 18 months if I'd be willing to send them photocopies.  I plan to!

21 August 2002 - Except for a couple of errors, AT&T issued me all refunds requested for older bills.  I've now taken care of the past amounts, and can just settle in to a routine of sending in the monthly form to get future amounts credited.  Join me in saving a buck or two each month!

04 September 2002 - I decided to call the Office of Consumer Advocate back today, not having heard from Ms. Desmond there in a while.  My P.U.C. pleadings have been pulled, and Ms. Desmond submitted an inquiry to their regulatory analyst, who is also an accountant, but that woman has not yet responded.  A similar inquiry to the lawyers there that were part of the original investigation revealed that they are still emphatic that their initial conclusion was right, and this case does not warrant O.C.A. intervention.  This is bogus, and I told her that, expressing my desire to speak with these lawyers, in order to challenge them to produce proof that Public Law 90-364, which repealed the statutes, has been superseded.  She mentioned the then-President Clinton veto of a bill that would have repealed the tax, alluding that since the veto occurred, the tax still exists.  I told her that this is the same tired argument that Verizon's lawyers tried to make.  Ms. Desmond said she'd call back after their regulatory analyst had time to respond.  I phoned Rep. Clymer's office to let him know that I may need his help in getting an appointment with the O.C.A. lawyers at some point.  If the state won't get on board to fight this, and won't say why (either specifying why my argument is flawed or why they don't have jurisdiction), then I have to assume that they either don't care about $80 million per year being fleeced from Pennsylvanians, or that they're taking a cut.  My faith in government continues its wane.

I put a call in to the lawyer I spoke with back on Monday, August 5th about beginning an investigation into a class action lawsuit against Verizon.  I'm waiting for his reply.

24 September 2002 - Lawyer update: no go.  The firm he relayed my information to deals more with anti-trust work and is not comfortable with the topic.  I guess they're afraid to take something like this on.  Go figure.  There's lots of money at issue here, but I guess they are afraid of a fight.  Wimps!

Another phone call to the Office of Consumer Advocate: I left a message requesting either a position in writing or an appointment with one or more of the lawyers there.  I also left a message with Rep. Clymer, to see if he can go to bat again for me, getting something useful out of the Office of Consumer Advocate.  It's pretty sad, in my opinion, that the state doesn't seem to care about the fraudulent taking of $80 million per year from the good citizens of the Commonwealth.

02 October 2002 - I left another message with O.C.A.  Rep. Clymer's office told me that he's taken my request for a meeting to Harrisburg to act on it there.  It really shouldn't be this hard to get a response from this agency, right?  Joel C. called back at about 5:15 p.m.  Even with the 3 "new" pieces of information (statutes repealed, no form, no order from feds), he feels there's not much that O.C.A. can do.  He suggests talking with a tax lawyer.  Okay.  I'll try calling one or two of them tomorrow.

11 October 2002 - O.C.A. called back.  They feel that I need to prove that even though the statute says it was repealed, it was not somehow reenacted.  Once I can do that, they might be interested.  I put a call in to a Quakertown tax lawyer who will be calling back on Monday.  I told his secretary that I want to consult with someone who is knowledgeable of and experienced in federal tax law.  The question is - once a law is passed by Congress that says a statute is repealed, do they or do they not need to pass a new law to reinstate the statute.  The O.C.A. lawyer suggested that I might be going back to the Bureau of Consumer Protection, which is where I started.  I was also told again that jurisdiction is something that is argued before a judge; it's not found in the statutes or regulations.

It looks like I am going to have to prove beyond the shadow of a doubt that the statutes were not reinstated (i.e., they're still repealed).  Once I have done that, perhaps the A.G. will get involved.  Perhaps.  Ugh.

14 November 2002 - A letter from AT&T arrived last Saturday.  They acknowledge my most recent federal excise "tax" refund request, but describe a change to the refusal process.  I no longer must submit the monthly form!  Fantastic!  All I need do is fill out their authorization form and send it in.  After that, I never need pay the "tax" again or take the time to fill out and send in a monthly form.  I'm going to contact Verizon and find out if they are coming up with a similar revision to their process.  I have updated my "How To Get a Phone 'Tax' Refund" page's AT&T refund procedure.

07 February 2003 - On January 23, 2003, someone who does a lot of I.R.S. research with regard to Individual Master Files posted a message to the Schiff newsgroup Tax-Freedom-Now, providing a Web site for the current O.M.B. control numbers.  She says that the I.R.S. uses numbers in the series "1545-nnnn", and instructs one how to look up the O.M.B. numbers for the form corresponding to a regulation of interest.  I've used this in the past a bit.

1. Visit tax regulation 26 C.F.R. 602.101, titled "Sec. 602.101 OMB Control Numbers".
2. Find the regulation of interest in the left column of the table in subsection (b), and note the Current OMB Control Number(s) in the right column.
3. Visit http://www.whitehouse.gov/omb/library/OMBINVT.html#TREAS to obtain the name of the form(s) for which you have an O.M.B. number or numbers.

I found this Web site interesting interesting for that purpose, which is more attuned to general tax research, but I used it for purposes of my phone tax research to double check the O.M.B. number required by regulation to be on the form for used for the Communications Excise Tax, as described in paragraph 2 of my 19 January 2002 entry above.  I paged through the site, looking for O.M.B. number 1545-1075, but alas, could not find it.  This validates further what the Office of Management and Budget told me on the telephone and in letter form - there is no form with that number.

05 October 2005 - Pennsylvania's U.S. Senator Rick Santorum decided to introduce legislation to repeal the Communcations Excise Tax, even though as you've seen in sufficient detail above, it was repealed quite some time ago.  A bit nauseated by what seemed like yet another attempt by a public servant to introduce feel good legislation to win approval, I went to his Web site and used the contact form to apprise him of the research that I had already performed, and suggest that it might be a waste of time for him to be trying to repeal what's already been repealed.  It's May 14 2006 as I write this, and I can't put my finger on a copy, if I kept one, of just what I wrote, but I do have his response letter (page 1, page 2 for you to read.

As you see, rather than address the issues I raised, he tells me, in what must be a boilerplate response, what I already know.  When I contacted one of his offices via telephone sometime this past winter, I complained about the non-response and gave them in a nutshell what my research had revealed.  They actually sounded interested, and I considered consolidating my research into a letter for their consideration.  Since then, I've decided that corresponding with our public servants, although admittedly important, is most often a waste of time.  The only thing they seem to care about is enough votes to stay in office.  Senator Santorum's office told me that the bill was stuck in committee, and I suspect it will die there.

24 March 2006 - In July 2005, the Libertarian Party's newspaper, Libertarian Party News, published a story about the Communications Excise Tax.  Add to this that I was irked about Pennsylvania's Senator Rick Santorum introducing legislation in 2005 to repeal this tax which does not exist, and it became time for me to write a letter clarifying the issue.  The LP News doesn't publish much of what I submit, because my writings about the voluntary nature of the federal income tax system conflict with the Libertarian Party's platform. I should state that I am a life member of the party, but it has its head in the sand with regard to income taxes.

26 May 2006 - I was recently told that a number of businesses and perhaps citizens are challenging the 3% Communications Excise Tax in court, and that they are WINNING!  It's nice to hear that the federal government is losing, after having raked in millions and millions of bucks with this tax, after it was repealed!  I'm looking for the court cases, to provide for you here an analysis.  In the mean time, enjoy this article from SmartMoney's Web site.

23 August 2006 - Pennsylvania Senator Rick Santorum sent a message via e-mail the other day, announcing his continuing efforts to repeal the Communications Excise Tax.  Whoopie!  I replied today, informing him that he is working to repeal something which has been repealed for 2-1/2 decades.  I am providing his message to me and my reply.