INI Global: Corporate Taxpayers Entitled To Big Refund On 2006 Returns

For Immediate Release
Contact: R.W. (Bob) Makowski
INI Global, 1-800-467-7226

A recent U.S. Treasury ruling entitles businesses to a 100 percent refund of certain federal excise taxes they have paid on long distance and cellular phone bills for a 41- month period. For larger corporations, the ruling could mean hundreds of thousands of dollars in refunds.

“All individuals and businesses are entitled to a full refund of the three percent tax they paid between March 1, 2003 and July 31 of this year,” said Nancy Peckham, president and CEO of INI Global, a telecommunications expense management company headquartered in Madison, Wis.

Claims for refunds must be filed with corporate 2006 tax returns. Corporations may be required to produce detailed documentation validating the amount of federal excise tax claimed for refund. According to Peckham, “That information is contained in carrier billing statements but can be a challenge to calculate.”

The federal excise tax on toll telephone services began in 1898 to fund the Spanish-American war, Peckham notes. Telephone service, a luxury at the time, was targeted with the tax as Congress wanted to impact only the most affluent of taxpayers. The tax was to be charged on time and distance-sensitive telecom usage.

After the war ended, the tax remained. Total cost to consumers is estimated at $300 billion to date, according to the Congressional Research Service. In the 1990s, long distance and cellular rates went from being distance-sensitive to flat-rate or postalized. Through further interpretation of the statute, it was determined that the federal excise taxes have been incorrectly billed to individuals and corporations for at least the past decade. The amount of refund to be issued to taxpayers is limited to the past 36 months, due to the three-year statute of limitations on federal taxes.

From 2004 to 2006, several companies, including American Bankers Insurance Group, OfficeMax, Amtrak, Fortis and Lexis, brought suit in federal court and were awarded refunds ranging from $360,000 to $434,000 for the previous 36 months of federal excise taxes on usage-based telecommunications. “Those awards set a precedent as numerous companies scrambled to apply for the refund,” according to Peckham.

In May 2006, the U.S. Treasury surrendered to the litigation pressures and issued the ruling repealing the federal excise tax on telecom usage services and allowing taxpayers to request a refund on their 2006 tax return.

In conjunction with the refund, the IRS has asked all long distance and cellular vendors to discontinue charging the excise tax as soon as is practical, but no later than July 31, 2006.

“Gathering the documentation to get the refund may be cumbersome”, said Peckham, who has been in the telecommunications industry since the 1984.

“The biggest challenge, especially for most mid-market and large corporations in filing for a refund, will be in the documentation of actual federal excise taxes paid on long distance and cellular services over this time period,” she said. “Companies will be required to obtain all long distance and cellular billing from March 2003 through July 2006 and audit them to determine the actual taxes paid on those services. The difficulty lies not only with the ability to obtain that information but also in analyzing the tax information and separating out the portion of the federal excise tax pertaining to long distance and cellular usage from flat rated services.”

INI Global utilizes proprietary technology to pull that information from both electronic and paper telecom bills. “We have assisted our clients in filing for significant federal excise tax claims over the past two years,” Peckham said. “ We have worked with our clients and our clients’ carriers to obtain invoices and information necessary to completely document the payment amount for the federal excise tax claims.”

“We were able to help one of our larger clients file for an excise tax refund in excess of $330,000”, said Bob Makowski, vice president of sales and marketing for INI Global, “while we have helped clients file for refunds as low as $34,000.”

“If you have your phone records for the past three years, you could probably determine your refund amount, but it’s a time consuming effort,” Makowski said. A company that doesn’t want to allocate internal resources for the effort can hire a telecom expense management company to do the work. “We can do this pretty easily for our clients using our people, processes and tools, ” Makowski added. “And we know how to obtain the past billing statements for clients who have misplaced or discarded original bills.”

After Aug. 1, 2006, companies will still need to audit their bills to make sure that the carriers do not continue to charge the federal excise tax on usage-based services. But after the filing of 2006 corporate tax returns, the opportunity to claim a refund will be over. “This is a claim-it-or-lose-it deal from the IRS,” said Peckham.

INI Global has been helping corporations across North America with management of telecommunications expenses since it’s founding in 1991. You can read more at