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Telephone Tax Refunds for Government Entities

Communication Tax Refunds For Government Entities

The IRS stated in IR 2006-82 and Notice 2006-50 that it would stop collecting the excise tax on long-distance telephone service, and provide an opportunity for taxpayers who paid the tax to request refunds. These procedures were established to allow refunds within the statute of limitations to all individuals and organizations that had paid the tax.

The Internal Revenue Service has clarified the procedure for requests for refund of telephone excise taxes by government entities. It was initially indicated that exempt organizations (including governments) would request the refund on Form 990-T, making the calculation of the refund on new Form 8913.

However, state and local government entities are exempt from all telephone taxes for their governmental functions under section 4253(i) of the Internal Revenue Code. Therefore, their refund requests are not covered by the provisions of Notice 2006-50. Any request for refund of telephone excise tax (whether local or long-distance) should be requested on Form 8849, Claim for Refund of Excise Taxes. Federal credit unions are also exempt and should follow the same procedures. Government entities should not use Form 990-T to request a refund of telephone tax.

You may request the refund directly from your telephone service provider. If you want to request the refund from the IRS, use the following procedure:

  • Fill out Form 8849 Schedule 6 with the amount to be refunded. Complete a line for each period for which you are requesting a refund.

  • Annotate the top of Form 8849 in red “Not a Notice 2006-50 Claim”. Complete the identifying information at the top, check the box for Section 6, and sign and date the return.

  • Indicate on the form that the request is filed pursuant to IRC section 4253(i). Attach Schedule 6 to Form 8849 and mail to:

Internal Revenue Service
Cincinnati, OH 45999-0002

  • Indicate that the telephone service provider erroneously imposed communications excise tax on the government entity.

Note: Disregard the “Caution” on page 2 of the Form 8849 instructions. This is directed to Notice 2006-50 requests and does not apply to communications tax refunds to governmental and exempt organizations.

A government entity may request a refund for Federal excise taxes on long distance service billed after February 28, 2003, and for all Federal telephone excise taxes billed after December 31, 2003.  You should request a refund for the entire period on one form; the return should be filed during calendar year 2007.  In addition, the there are statutory deadlines applicable to requests for calendar year 2004.  The refund requests for the calendar quarters shown below must be filed by the due date shown:

2004 Calendar Year Quarter Refund Request must be filed by: 
January-March 2004 April 30, 2007
April-June 2004 July 31, 2007
July-September, 2004 October 31, 2007
October-December, 2004 January 31, 2008
Page Last Reviewed or Updated: 27-Apr-2014