IRS tells businesses how to compute phone tax refunds
The excise tax on long-distance telephone services is being refunded to taxpayers for the period of March 2003 through July 2006.
The IRS has now issued details on how businesses and nonprofit organizations can claim their refunds of this tax if they choose not to calculate the exact amount paid. The simplified method compares the telephone bill from April 2006 (when the tax was still being levied) to a telephone bill from September 2006 (when the tax was no longer being charged). The refund amount is capped at either 1% or 2% of total telephone expenses, depending on the number of employees. Sole proprietors have other rules, depending on the amount of business income.
New rules on direct deposit
The IRS is reminding taxpayers about the new options for the direct deposit of tax refunds. This year, for the first time, taxpayers may request that their tax refund be split and directly deposited in up to three separate financial accounts, including an IRA.
If the actual refund is larger or smaller than originally calculated on the taxpayer’s return, the adjustment will be made to the last account designated by the taxpayer. Adjustments can be made for many reasons, including delinquent state income taxes, out-standing child support payments, or delinquent nontax federal debts. If you split your tax refund, be sure you monitor what actually gets deposited and to what account.