Jack TenneyExtra Point

by Jack Tenney, Publisher

February 2007

The Taxman Goeth

It was only a telephone tax

The feds collected to the max.

Then, due to a conscience attack

They decided to give it all back.

So, how would you go about refunding $13 billion in overcharges to 159 million taxpayers?

The IRS has a name for the process, and a form, and instructions. It’s called TETR (The Excise Tax Refund); the form is 8913; and the instructions are set forth in a basic four-pager. Simple, wouldn’t you agree?

In our businesses, from time to time, we discover an instance where a valued customer has been overcharged or, maybe, overpaid. Once we know, a refund check goes out or a credit is issued to his account. Can you imagine what it must have been like to set up this TETR thing? I’m positive the Treasury Secretary didn’t run the meetings; it was staff. And you can bet the first few tries missed the mark.

In the end, the process they came up with is impressive. But I wonder why the process isn’t a little more — what do I want to call it? — businesslike. The $13 billion in overcharges isn’t exactly an estimate. The 3 percent excise tax came in to the feds from the folks who collected it: telephone companies. The telephone companies collected the tax from customers. With the exception of long distance calls made from coin-operated pay phones, all the moneys came from people whose names, addresses, telephone numbers (doh) are — or were at the time of the excess charges — known. So how come the feds didn’t give the money back to the telephone companies with instructions to give it back to customers?

Granted, over 41 months, the period from March 2003 to September 2006 when the taxes were collected, a few people moved around, died, came, went, skipped, started, stopped and the like. But you know, those exceptions could then be given the task of filling out the 8913 form, and the telcos could give back their unrefunded moneys to the feds to fund the refunds. 

As it stands, the average refund figures to be $81.76 — the $13 billion divided 159 million ways. Most individuals will receive between $30 and $60 based on the number of dependents listed on their returns for the years 2003, 2004, 2005 and 2006. On the back of an envelope, I figured 150 million taxpayers will get $45, leaving an average $750 for the remaining 9 million taxpayers, most probably businesses, political parties and charities. Of the entities that “live” on the phone, four quickly come to mind: Time-Life Books, collection agencies, political pollers and drivers with cell phones.

Oh, well, we’re all worthy of a shot at excise refunds. Be wary, however, if you actually pull out the 41 phone bills for each of the months in question for each of your phones and complete the form. You’re going to be allowed interest (the interest tables are on page 4 of the 8913 instructions) as a reward for filling in the 59 boxes on the form. That interest, of course, will be taxable on your 2007 return.

Don’t forget — the IRS won’t.