New Direct Deposit Rules
IRS tells businesses how to compute phone tax refunds
The excise tax on long-distance telephone services is being refunded to taxpayers for the period of March 2003 through July 2006.
The IRS has now issued details on how businesses and nonprofit organizations can claim their refunds of this tax if they choose not to calculate the exact amount paid. The simplified method compares the telephone gill from April 2006 (when the tax was still being levied) to a telephone bill from September 2006 (when the tax was no longer being charged). The refund amount is capped at either 1% or 2% of total telephone expenses, depending on number of employees. Sol proprietors have other rules, depending on the amount of business income.
New rules on direct deposit
The IRS is reminding taxpayers about the new options for the direct deposit of tax refunds. This year, for the first time, taxpayers may request that their tax refund be split and directly deposited in up to three separate financial accounts, including an IRA.
If the actual refund is larger or smaller than originally calculated on the taxpayer's return, the adjustment will be made to the last account designated by the taxpayer. Adjustments can be made for many reasons, including delinquent state income taxes, outstanding child support payments, or delinquent non-tax federal debts. If you split your tax refund, be sure you monitor what actually gets deposited and to what account.
Phone Tax Refunds Taxable
In 2007 the IRS is refunding the excise tax paid on long-distance telephone services during the period of March 2003 through July 2006. Businesses that deducted the excise tax as part of their deductions for telephone bills will owe income tax on the refunds they receive in 2007.