Thursday, May 25, 2006

A Little Tax Relief, But Still A Long Way To Go

In a very surprising story I read on TaxProf Blog, the IRS announced today that it will no longer collect the Federal Excise Tax on long distance for cell phones. You may recall that I wrote about the Federal Excise Tax here and here. For those who were unaware, the 3% tax was enacted in 1898 (you read that right: 1898) as a luxury tax to fund the Spanish-American War (you read that right the Spanish-American War).

After losing cases in five separate appeals courts, the government has decided to stop collecting the tax and issue a refund. The IRS will issue $15 billion dollars in tax refunds for taxes paid on services over the past three years. Taxpayers need to take no action now but rather complete a claim form to be submitted with 2006 income taxes in April of 2007.

I don't know about everyone else, but I've had a cell phone for more than three years so the limited refund doesn't seem quite right to me, but of course there is some kind of statute of limitations preventing older claims. In any event, this is a good start, but more frivolous taxes need to be abolished before the government will start spending our hard earned money wisely and stop wasting it on bridges and railroads to nowhere.

No comments: