Tax Development Dec 22, 2005
On December 9, 2005, the U.S. Court of Appeals for the District of Columbia Circuit affirmed the District Court's judgment in National Passenger Corp. vs. United States, D.C. Cir., No. 04-5421, 12/9/05. The Court of Appeals agreed that the 3% Federal Excise Tax is not due upon telephone calls for which the toll charge only varies by time, and not by distance. The vast majority of toll telephone calls made today are billed only upon the basis of the duration of the call and not upon the distance between the individuals participating in the call.
Another recent U.S. Court of Appeals case that has been decided in favor of the taxpayer is Office Max vs. United States, 6th Cir., No. 04-4009, 11/2/05. Similar to National Passenger Corp., the U.S. Court of Appeals for the Sixth Circuit affirmed the District Court's judgment that toll telephone calls must be billed upon the basis of time and distance in order for the calls to be subject to the Federal Excise Tax. These cases follow a series of cases decided in favor of the taxpayer at various levels of the Federal Courts.
Refund opportunities exist for all purchasers of these types of telecommunications services as well as similar services. A detailed analysis of telecommunications purchases should be performed and refund claims should be filed as soon as possible in order to maximize the amount of refunds received.