The IRS Owes You Money


The IRS has a $10 billion tax credit for 140 million Americans. But the deadline is April 17th–unless you file for an automatic extension.

On May 25, 2006 the U.S. Treasury Department decided to stop fighting successful litigation over a federal excise tax on long-distance service first imposed on wealthy people owning telephones to help pay for the Spanish-American war in 1898. Then the IRS announced a refund of these taxes paid over the past three years.

You have to check a clearly marked box on your 1040 income tax return (line 7) to receive between $30 and $60 depending on the number of dependents. If your income is so low that you do not have to file any income tax return (estimated to be 15 million households by the Center on Budget and Policy Priorities), there is a special Form 8913 or another new form, 1040EZ-T.

Depending on your taxable income situation, simply checking the box next to the description “credit for federal telephone excise tax paid,” will either reduce the taxes you owe or increase the refund due you.

Sounds simple, right? Not for about one third of the taxpayers who filed, but neglected to check, as of February 16th, according to the IRS. That meant over 10 million taxpayers did not request the telephone refund. Even more remarkable, the Maryland IRS office reported on March 27th that only one in three of those from Maryland filing federal tax returns to that date claimed a refund.

Even though the IRS initiated a media campaign to get the word out about the refund program, and even though nearly half of all tax returns are prepared by commercial preparers like H & R Block, it looks like billions of dollars will not be refunded by the coming deadlines.

Presumably the additional $10 billion slated to be refunded to businesses and non-profits will have a higher percentage checking the special box on their returns.

The IRS announcement has been conveyed through numerous large and small newspaper, magazine and radio-television outlets. But in today’s multi-media fractured environment, it takes a lot more trumpeting and a lot more repetition to get through daily information blizzards.

Then there is the bad news syndrome. A few days ago I called up ABC television’s “It’s Your Money” office. The researcher told me that those in charge of selecting topics turned down the telephone excise tax story. As you may recall, “It’s Your Money” has been on ABC television news for years both exposing government and corporate waste of your money without finding a way to get you involved in stopping these takeaways.

Well, now with the perfect example of “It’s Your Money” and a simple way for you to get some of your money back, this segment apparently felt that such yawning good news would not sufficiently grab or retain audience share against the other networks.

Nonetheless, one would think that fast word of mouth over the past months would have reached most people. That assumes people talking with one another–not a sure assumption during these days of watching screens and listening to your choice of non-stop music.

It is still not too late for numerous blitzes. For example, churches in low income districts, members of Congress and state legislatures, national television comedians (Jay Leno and David Letterman) and talk shows making light but still reaching people with the message can all help spread the word.

There are many highways to many people. Trade associations notifying their company members to notify their employees; labor unions have ready contact with millions of customers. So do bookkeepers and accountants. Strange that there is even a problem.

After April 17, what can be done with the leftover unclaimed billions of dollars? As of now, they’re probably going back into the general budget. What about taking this money and creating a perpetual taxpayers’ watchdog endowment trust whose income will expose and help stop government waste as well as businesses and others ripping off the government, such as the health care industry cheating Medicare and Medicaid? Something for Congress to consider.

For now, you can get information about the refund by calling IRS toll-free at 1-800-829-1040. Or just remember to check the claim box on one of the following-Line 7 of Form 1040, Line 42 on the 1040A, Line 9 on the 1040-EZ, Line 69 on the 1040NR, or Line 21 on the 1040NR-EZ.


RALPH NADER is the author of The Seventeen Traditions



Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us!