Wednesday, April 06, 2005

The IRS loses yet again on telephone tax.

The Federal Court of Claims has just ruled that another business's long-distance and toll-free calling services are not subject to telephone excice tax because calls are billed simply by duration. The Tax Code defines calls subject to tax as those that are billed individually by both time and distance.

Now there are seven federal court decisions holding that calls made using other kinds of billing plans -- negotiated rate, bulk rate, time only, "friends and family", whatever -- are not subject to tax. Industry experts say the tax refunds at stake could exceed $6 billion.

The result this time: a $200,000 refund.

And once again the case was decided on summary judgment -- meaning the court deemed the IRS position so wrong on its face as to not be worth hearing at a trial.

Case: America Online Inc. v. United States; No. 03-2383-T, Court of Federal Claims.

Hey, the same legal logic applies to small businesses and individuals too. Protect your refund claim!

More on this, with references to all the other cases and to more extensive legal analysis, has been posted previously (here and here).