Daily Tax Update - January 31, 2007

IRS OFFERS TIPS ON TELEPHONE TAX REFUND: Today, the IRS offered taxpayers tips for requesting the telephone excise tax refund, after early tax returns show some people are making basic mistakes, others are requesting excessive refunds and many are missing out on the refunds, altogether. Errors included, filling out the Form 1040 EZ-T incorrectly and requesting a refund that appears to be based on the entire amount of the taxpayer’s phone bills, rather than just the three-percent tax on long-distance and bundled service. The IRS offered several tips to avoid mistakes including filing electronically and using the standard-refund amount for the telephone-tax refund. The standard refund amount is between $30 and $60, based on the total number of exemptions claimed on the 2006 tax return.

  • The IRS said that it is "investigating potential abuses among early filers who requested large and apparently improper amounts for the telephone tax refund. The IRS will take prompt action against taxpayers who request improper refund amounts and the return preparers who help them."
  • IRS Commissioner Mark Everson said, "We encourage taxpayers to take a few minutes and review the details of the telephone-tax refund. A little extra time will reduce the chance for a mistake, avoid a refund delay and possibly add a few dollars onto refund checks."
  • Additional information can be accessed via: http://www.irs.gov/newsroom/article/0,,id=167425,00.html


As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.