Monday, January 15, 2007

IRS Tax Refund

Federal Excise Tax Refund. The BizJournal has the details
Businesses, corporations and even nonprofits were originally not going to be allowed to claim a standard amount of credit and instead would be forced to itemize. But, in November, the IRS announced that companies could use an estimation formula based on all telephone bills collected from only the months of April 2006 and September 2006. "The easiest way to calculate is most businesses can quickly run a general ledger report to see how much they paid for telephone expenses for that time period," Howell says. For that three-year window, businesses can expect generally to get up to 3 percent of their long-distance expenses refunded if they can show all their phone records, according to Bob Harrell, principal of Winston-Salem's Expense Reduction Specialists, which audits business expenses for area companies. But if the businesses just want to use the April and September bills to estimate the tax, it's not as much work, Harrell says. There are two ways to receive the refund. Companies that have copies of all of their long-distance phone bills, not including cell phones, from Feb. 28, 2003, to Aug. 1, 2006, can add up the actual bills to receive a 3 percent return on the money they spent on long-distance during that time. But companies that didn't have a lot of long-distance expenses during that time period may just use the IRS estimation formula based on all telephone bills collected from only the months of April 2006 and September 2006 to come up with a return figure. The total telephone tax on the April and September bills would be computed as a percentage of the total April and September bills. The difference between these percentages from April to September would be the percentage of excise tax relief. This percentage would be applied to all telephone expenses from March 2003 through July 2006 to determine the gross credit available. The credit cannot exceed 2 percent for businesses with fewer than 250 employees or 1 percent for businesses with more than 250 employees using this formula, Howell says.

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