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How To Get a Phone "Tax" Refund

Introduction

What tax are you talking about getting refunded?

What, if any, risks are involved?

Refund procedure, Verizon Pennsylvania

Refund procedure, AT&T Pennsylvania

Expanding this page - how you can help

Introduction

This page describes how to get a refund of the three percent federal Communications Excise Tax amounts on your local and long distance telephone service.  Since the author resides in Pennsylvania, the first procedure described is for that state, with the desire to expand this page state by state, providing a procedure for each of them.  That will occur with your help (see the bottom of this page).

The procedures presented on this page are derived from the research by and experience of the author since 1999, as presented on this Web site's Phone Taxes page.  The reader is referred to that page for all background information on this "tax", including statutes, regulations, the author's complaint as dealt with by the Pennsylvania Public Utility Commission, etc.  The Phone Taxes page provides the meat; this page provides the "how to".

What tax are you talking about getting refunded?

If you look at your local or long distance telephone bill, you might become confused (if not nauseated) by the quantity of "non telephone" charges, and the dollar amounts thereof.  If you're a Verizon Pennsylvania customer such as myself, you've got the Federal Line Cost Charge, Local Number Portability Surcharge, Federal Universal Service Fund Surcharge, Pa. Relay Surcharge, Public Safety Emergency Telephone Act (9-1-1) Fee, Federal Tax, and State Tax.  Pennsylvania AT&T long distance customers will find the Universal Connectivity Charge, Federal Tax, State Tax, and PA Gross Receipts Tax on their bill.  Augh!

A fellow telephone tax researcher in North Carolina has found that many of the above fees are not legitimately charged, but he was unsuccessful in avoiding their payment, and I haven't done that much research yet.  We're going to start small.  The specific tax that you will be able to get refunded using the procedures on this page is the 3% federal Communications Excise Tax, referred to as "Federal Tax" on the Verizon and AT&T Pennsylvania bills, and hereinafter also referred to as C.E.T. or "tax", with the word tax in quotations because it's not really a tax anymore, if it ever was.

What, if any, risks are involved?

Before going any further, I want to discuss the risk factor.  If you follow the procedures below, you'll be contacting your telephone company to let them know that you've learned that the 3% federal Communications Excise Tax is no longer in existence, asking them for the form to use to obtain a refund and where to send it, then using that form to obtain credits.  The phone company will, upon receipt and processing of the form, credit your account for all C.E.T. amounts charged.  It sounds too good to be true, so you're thinking that either there's a catch or that somehow this can come back to haunt you.

I and others have safely been using this procedure for many months now.  After extensive research for the preparation of my Public Utility Commission (P.U.C.) complaint, the only law that I found that could possibly be construed to provide any heartburn here is 26 C.F.R. 49.4291-1.  This regulation is what Verizon Pennsylvania claims to be its requirement to obtain the monthly form from customers in order to issue a refund.  The regulation also says in relevant part "If the person from whom the tax is required to be collected refuses to pay it, the collecting agent is required to report to the district director the name and address of that person.  Upon receipt of this information the district director will proceed against the person to assert the amount of tax due."  What this means is that the potential worst case scenario is this - you send the forms to the phone company, they (supposedly) send them to the Internal Revenue Service, then the I.R.S. district director proceeds against you "to assert the amount of tax due."  To do that, the district director would have to, in accordance with the last sentence of this regulation, prove that you are liable for the tax, then go through the administrative process to collect it.  Top that off with the fact that this regulation is not legislative, and the result is this - there is nothing that I've found in the applicable tax law that can get you in trouble for filing the forms.  I pushed the envelope further by refusing to file the forms for a while and filing the complaint with the P.U.C., but after being assured that the phone company could and would disconnect service if the overdue amount "due" got too high, I decided to flood them with a barrage of forms going from the present back to April 1999.  They want the forms? - they got 'em!

Please refer to the applicable part of the Phone Taxes page and pages 5 and 6 of my Formal Complaint for the full text of the above-described regulation and why it is nothing to worry about.

I described the risk, but how about the cost?  It makes little economic sense to spend 34 cents in postage to mail in a form to save 80 cents on a phone bill.  Depending on your typical bill, the difference, and thus the savings, may be much greater.  Overcoming this postage offset was important to me, and it was accomplished by Gene, who obtained from Verizon Pennsylvania a toll free facsimile number to use.  Now, other than the value of your time spent in preparing the form, there is NO COST in the preparation and submission thereof.  Of course, you might not be lucky enough to be able to use a toll-free facsimile line to submit your refund requests.

Now that I've introduced this page and the tax and assured you that there is really no risk involved, let me move onto describing how one actually gets a refund.  Oh - if you still don't feel good about the risk factor, call your telephone company and talk with them about it (you'll be calling them anyhow!).  Ask what if any risks there are if you want to get the "tax" refunded and you use the company's recommended procedures.  You might wish to call the I.R.S. and ask them the same question, but I doubt you'll find anyone there with specific knowledge of this issue, or if you do, one that will put anything in writing.

Refund procedure, Verizon Pennsylvania

Here, in list form, is the procedure to use to get a refund of the C.E.T. amounts charged to your Verizon Pennsylvania (also referred to hereinafter as simply "Verizon") telephone bill.

1. Contact your Verizon Pennsylvania business office!  Why?  Gene, my colleague in this endeavor and one with much more telephone company experience than I, suggested this recommendation so that the telephone company records your request for the form and your intent to file for tax refunds.  He feels it's important that they annotate your account with your intent/request.  I agree that it is probably better to start the process by informing them in this way, rather than just sending them refund request forms without any advance notice.  You may also wish to request and record the name of the agent you speak with.  With specific regard to the tax, here is the information you want to obtain from the helpful Verizon representative:
• Tell him that you've learned that the 3% federal Communications Excise Tax is no longer in existence.
• Ask him for the procedure you should follow to get these tax amounts credited to your account - it should be the monthly filing of their form.  If he feigns ignorance, mention that you know of other Verizon customers who are using such a form.
• Ask him to send you the form to use to obtain a refund, by mail or facsimile as appropriate to your situation.
• Ask him for the toll-free facsimile number that you can use to submit the form, or if you don't have access to a FAX machine and must submit the form via the costlier mail, ask him for the mailing address you should use.
2. Locate "Federal tax" amount in the BASIC CHARGES, NON-BASIC CHARGES, and VERIZON TOLL CHARGES sections of your bill.  Use this link to see an example of the amount as it appears in these three sections of a Verizon telephone bill.
3. If you use any of the "10-10" long distance services, you should also locate the "Federal tax" amount from the section of your bill (included after the Verizon part of the bill) for those services.  Use this link to see an example of the amount as it appears in this section of a Verizon telephone bill.
4. Assuming (safely) that the form you obtain from Verizon is the same as the one I obtained, prepare the form using the following steps:
• Type your name on the "Name" line.
• Type your telephone number on the "Telephone Number" line.  I added the 3-digit account suffix to fully specify the account number.
• Type the date of the phone bill you're seeking a refund of the C.E.T. for on the "Date of Bill" line.
• On the "Reason for Refusal" line, you may either use the four items that I do, which are a result of my P.U.C. complaint research as fully documented on the Phone Taxes page, or come up with one or more reasons of your own, based on my research or your own research.  When I first filed these forms in 2001, my reason for refusal material was less substantive than now - it really just relied on regulation 26 C.F.R. 49.4251-1(b)(1), which terminated the tax in 1965, and a conversation I had with a Verizon business office.  After having done all that research for the P.U.C. complaint, though, I've got a much more powerful and concise reason (actually, 4 reasons):
1. Verizon has no directive from the I.R.S. to collect Communications Excise Tax¹
2. Statutes implementing Communications Excise Tax were repealed in 1982
3. Regulation 26 CFR 49.4251 ended Communications Excise Tax in 1965²
4. Verizon has no form provided by law to report collection of this "tax"³



Notes:

1) Only proven, via my interrogatory using the discovery process, to be true for Verizon Pennsylvania.  Do not include this if you are not a Verizon Pennsylvania customer.

2) Mistakenly identified by me as 26 CFR 49-4251 on the sample form (doh!)

3) This applies to all telephone companies, but you should replace "Verizon" with the name of your telephone company.



• Under the "Amount of Federal Tax you are refusing to pay:" heading, enter on the "Verizon" line the sum of the three amounts you found on your bill in step 2.  Similarly, enter on the "Other Carrier" line(s) the sum of the amounts you found on your bill in step 3.  Use a different "Other Carrier" line for each separate carrier.  I don't know if it is necessary, but I also annotate the form to include for each "Other Carrier" line the name of the carrier.
• Sign the form on the signature line.  I scanned my signature and saved it as a TIF image, allowing me to import it into my telephony program and drop it on the form, right after the "All rights reserved".
5. Your form is now complete.  It should look something like this sample form.  If not, please go back through the steps above.
6. Send the form, using the contact information you obtained as recommended above.
7. Please contact me and let me know of your success, or if you for some reason encounter difficulty.

Here is the contact information, included for reference and comparison, that I obtained for submitting "Refusal to Pay" forms to Verizon Pennsylvania.  Actually, Gene obtained the FAX number for Beltsville, Maryland.  I was given the Pittsburgh number when I called with regard to a business line, and I only use it for that account.  As I have recommended above, you should contact Verizon yourself and use the mail/FAX information they give you.

For the refund form, here are CompuServe GIF files and Rich Text Format word processor files that I have prepared.  The original forms that Verizon sent me via facsimile were of poor quality and were tilted, making the typing in of information on the lines very difficult.  I retyped the forms in my word processor, printed them out, and used my scanner to scan the printouts at 300 dots per inch to create the .GIF files.  These form files are provided for reference and comparison; as I have recommended above, you should contact Verizon yourself and use the form they give you.  Of course, if they send you the same form as I am using (and that should be the case) then by all means, use my cleaned up versions as you see fit.  You will be able to open the .RTF files in Word and other word processors; Paint Shop Pro and other graphics programs may be used to open the .GIF files.

Refund procedure, AT&T Pennsylvania (modified Nov. 2002)

14 November 2002 - I'm still presenting below the procedure as originally put together, but please see the before implementing it.  I would recommend a modified step 1 below, in that when you contact AT&T, ask about the "Authorization to withhold billing of Federal Excise Tax" form.  That form is filled out once, and replaces the monthly form submission process which was in place earlier and described below.  You can view the form as I completed it here.

On June 28, 2002, AT&T sent me a letter providing the procedure to use to obtain C.E.T. refunds.  Here then, in list form, is the procedure to use to get a refund of the C.E.T. amounts charged to your AT&T telephone bill.

1. Contact AT&T.  The reasons are the same as given in step 1 of "Refund procedure, Verizon Pennsylvania" above, and you should ask for the same information from the AT&T representative.
2. Locate "Federal tax" amount on your bill.  Use this link to see an example of the amount as it appears on an AT&T telephone bill.
3. I decided to modify the Verizon form and use that, rather than a letter as AT&T specified.  If you'll be writing a letter, it's going to be the form information in letter form anyhow.  If you decide to go with a form, prepare it using the following steps (based upon the information that AT&T told me they want):
   • Type your name on the "Name" line.
   • Type your mailing address on the "Address" line.
   • Type your telephone number on the "Telephone Number" line.  I made sure to fully specify the account number.
   • Type the date of the phone bill you're seeking a refund of the C.E.T. for on the "Billing Date" line.
   • On the "Amount of 'tax' not paid:" line, enter the amount you found on your bill in step 2.
   • On the "Reason for Refusal" line, you may either use the three items that I do, which are a result of my P.U.C. complaint research as fully documented on the Phone Taxes page, or come up with one or more reasons of your own, based on my research or your own research.  For AT&T refunds, I started with the four reasons from the Verizon Pennsylvania form, but deleted the first one -- "Verizon has no directive from the I.R.S. to collect Communications Excise Tax" -- because I do not know that to be true for AT&T (remember that I only learned that from Verizon via an interrogatory).  Here then, are the three that I am using:
   1. Statutes implementing Communications Excise Tax were repealed in 1982
   2. Regulation 26 CFR 49.4251 ended Communications Excise Tax in 1965
   3. AT&T has no form provided by law to report collection of this "tax"¹
   
   

   Notes:

   1) This applies to all telephone companies, but you should replace "AT&T" with the name of your long distance telephone company.

   
   
   • Sign the form on the signature line.  AT&T didn't specifically ask for a signature, but since they wanted a letter, I am guessing that they figured they would get the signature that way.  I scanned my signature and saved it as a TIF image, allowing me to import it into my telephony program and drop it on the form, right after the "All rights reserved".
4. Your form is now complete.  It should look something like this sample form.  If not, please go back through the steps above.
5. Send the form or letter, using the contact information you obtained as recommended above.
6. Please contact me and let me know of your success, or if you for some reason encounter difficulty.

Here is the contact information, included for reference and comparison, that I obtained for submitting "Refusal to Pay" forms to AT&T.  As I have recommended above, you should contact AT&T yourself and use the mail/FAX information they give you.

For the refund form, here are CompuServe GIF files and Rich Text Format word processor files that I have prepared.  The files are the Verizon form files from above, modified to include the information that AT&T specified in its letter.  These form files are provided for reference and comparison; as I have recommended above, you should contact AT&T yourself and use the form or letter they recommend.  You will be able to open the .RTF files in Word and other word processors; Paint Shop Pro and other graphics programs may be used to open the .GIF files.

Expanding this page - how you can help

As mentioned in the introduction, I would like to expand the refund procedures on this page to include states other than Pennsylvania.  If you are a citizen of another state, here is how you can help me do that:

1. Contact your local and long distance carriers, let them know that you have learned that the 3% federal Communications Excise Tax is no longer in existence, ask them for the form to use to obtain a refund, and ask them if there is a toll-free facsimile number you may use to submit it.  Also obtain from them a mailing address to the forms may be sent, so that I may provide that information for those without FAX capabilities.
2. Forward the information obtained to me via e-mail.  Please include the business office telephone number you dialed to obtain the information (I want to be able to call myself and confirm the information before publishing it on my Web site).  I would also appreciate the inclusion of your contact information, in case there is a need for follow-up of any kind.
3. If you are a Verizon Pennsylvania customer, and you are provided with mailing or FAX contact information other than that which I have provided above, please forward it to me for inclusion.
4. As mentioned on my Phone Taxes page, I am still fighting this "tax" from a legal standpoint, but in the meantime, we can accomplish much of the same goal by flooding the phone companies with refund requests, clogging more the I.R.S. when the forms are forwarded to them, and cutting off more of the federal beast's food supply, all by simply, safely, and lawfully "saving a buck or two" each month by requesting a "tax" refund!