The Internal Revenue Service announced a formula allowing businesses and tax-exempt organizations to estimate their federal telephone excise tax refunds.In May, the government announced that it would stop collecting the federal excise tax on long-distance telephone service beginning Aug. 1, 2006, and provide refunds for taxes billed after Feb. 28, 2003.

To request a refund, businesses (including sole proprietors, corporations and partnerships) and tax-exempt organizations must fill out Form 8913, “Credit for Federal Telephone Excise Tax Paid.” Organizations can either determine the actual amount of refundable long-distance telephone excise taxes they paid for the months from March 2003 through July 2006, or, instead of gathering 41 months of phone records, use a formula to calculate their refunds.

The refund is capped at 2 percent of the total telephone expenses for organizations with 250 or fewer employees -- which covers more than 99 percent of all businesses. The refund is capped at 1 percent for organizations with more than 250 employees. Options for requesting the refund vary for sole proprietors.

The IRS developed the formula after receiving public input and discussing the issue with business organizations, the Small Business Administration and representatives from the tax-exempt community.

The IRS already has provided individual taxpayers with the option to use standard amounts based on the number of exemptions allowed to that taxpayer. Individual taxpayers can request a $30 refund with one exemption, $40 for two exemptions, $50 for three exemptions and $60 for four or more exemptions.

More details are available on the IRS Web site, at www.irs.gov/newsroom/article/0,,id=164305,00.html.

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