Phone Tax Repeal First Good Step

Washington, DC â?? A tax imposed more than one hundred years ago faces repeal in an announcement today from the U.S. Treasury Department, according to Idaho Senator Mike Crapo. However, Crapo says that the repeal of a federal tax on long-distance phone service is just part of what is needed. The Treasury Department will retroactively end the three percent tax, which was first imposed in 1898 as a luxury tax on individuals who owned telephones. Additionally, Treasury will provide a tax refund for the past three years of the tax. â??Telephones have long ceased being a luxury item, and itâ??s about time the federal tax law caught up with that,â?? Crapo said. â??However, this repeal doesnâ??t extend to the excise tax on local phone service. Congress still has to act to remove that outdated fee. The tax refund for the past three years is a beneficial start, but Congress must act now to remove this unnecessary tax on local-phone service.â?? Legislation is now pending before the Senate Finance Committee on repealing the tax on both long-distance and local phone service. Crapo, who is a member of the Finance Committee, is an original co-sponsor of the legislation. The refunds will be part of 2006 tax returns filed in 2007 and will include interest. The IRS is currently working on a simplified method for individuals to use to claim a refund on the 2006 returns. For more information on the federal excise tax repeal, visit www.treasury.gov.