Retailers and other businesses that sell prepaid phone cards for long-distance service can usually qualify for the telephone tax refund, according to the Internal Revenue Service.
In most cases, it is the phone card retailer, and not the phone company that issues the card or the customer who actually uses the card, that is responsible for paying the 3-percent federal excise tax. As long as the phone card was not restricted to local-only service, the retailer is eligible to request the telephone tax refund.
While the law places the responsibility for the collection of the excise tax on the carrier, the carrier, typically a phone company, has transferred the phone card to a retailer or other business. Because the end user is also not liable for the tax, the burden of the excise tax usually falls on the retailer -- the first person that is not a carrier to whom a phone card is transferred.
The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. Federal officials also authorized a one-time refund of the 3 percent federal excise tax collected on service billed during the previous 41 months.
Businesses can request the refund by filling out Form 8913, “Credit for Federal Telephone Excise Tax Paid,” and attaching it to their regular income-tax return. More information is available by accessing a section of the IRS’s Web site dedicated to the tax, located at
