IRS Struggles To Give Away $8 Billion

Free money! Free money! We shouted, begged, implored you to take the free money that was rightfully yours, but no, you would have none of it. The free money was too good for you. Too much effort, you said, to fill out a simple line on your tax return to celebrate phone ownership and our victory in the Spanish-American War. And now, $8 billion beautiful bucks lie cluttering our treasury, taking up valuable space needed for Social Security IOUs.

The tax agency estimated that the one-time refund would affect between 145 million and 165 million individual taxpayers, including many who normally do not need to file tax returns.

But, as of August, the IRS had repaid just over half of the overcollected tax, according to the Treasury Inspector General for Tax Administration.

The inspector general report cited two main reasons for the lower-than-expected refunds:

  • Many taxpayers, following the advice of the IRS, asked for the standard amounts developed by the IRS. No documents were needed for these standard amounts, which ranged from $30 to $60 based on the number of exemptions claimed.
  • Despite what the report said were generally good efforts by the IRS to communicate the program to taxpayers, many remained uninformed. As of June 9, about 87.6 million, or 71.5 percent, of the 122.6 million individual income tax returns filed had made a phone tax refund claim.

The IRS needs your help. If you already claimed the excise tax refund, check to see if maybe you can squeeze a little more milk from the cow. If you claimed no refund at all, help with the Treasury’s fall cleaning and pick up a copy of Form 1040X.

IRS giving back money, but many not taking it [L.A. Times]

40 Million Taxpayers Forget To Collect The Telephone Excise Tax
Forgot To Claim The Telephone Tax Refund? File An Amended Return.
Tax Tip: Cell Phones Qualify For Telephone Excise Tax Refund
Tax Season: IRS Owes You $60 If You Own A Phone
New Things To Know For Taxes This Year
Consider Itemizing Your Telephone Tax Refund


Edit Your Comment

  1. DadCooks says:

    Hey IRS, how about just dividing up that 8 billion equally among all the folks who filed returns for 2006. That would clear up their problem and make everyone happy.

  2. pine22 says:

    well, people who filed like $6500 in taxes shouldnt get as much as the dude who paid $2,000,000 in taxes lol.

    might as well give it to charity or add it to like public education, do something good with the money ya know.

  3. zahava says:

    is it possible that because so many people only have cell phones and no land line, this tax just doesn’t apply to as many people as they expected? i know that’s why it didn’t apply to me….

  4. Nytmare says:

    I’m one. I like to fill out the 1040 by using the previous year’s form as a guide, and I missed the telephone tax line item which was hidden in the middle of several never-applies-to-me line items. And $30 is a borderline reward for having to go diving back into the tax forms in order to file the amendment.

    But as long as you’ve brought it up, I think I’ll stop procrastinating and go fill it out right now. Thanks.

  5. Crazytree says:

    you’re screwed unless you’ve saved every phone pill you’ve paid for the last 5 years.

  6. timmus says:

    I’ll gladly sacrifice my share of the loot if it will go towards stopping the war or funding health programs for American kids.

  7. dohtem says:

    I got mine. I didn’t even know of the telephone exice tax but I did my last taxes with some super awesome version of TaxCut and it got everything I could possibly get.

  8. kenposan says:

    Turbo Tax took care of for me.

    And that $8B isn’t going to Soc. Sec, it is going to Bush’s war chest.

  9. dohtem says:

    @dohtem: Whoops… correction, it was TurboTax I used.

  10. witeowl says:

    @Crazytree: Bzzt. There’s a standard deduction (as stated in the article).

    @timmus: Agreed. Let’s stop wasting money trying to get the word out. Just put it to something useful… like actually funding NCLB, the infamous and most damaging unfunded mandate of education.

  11. CumaeanSibyl says:

    I didn’t claim the excise tax because, at the time I filed, I had never paid a phone bill in my life. Between living at home, living in college housing, and renting from a landlord who rolled everyone’s utilities into their rent, I just never had to do it. I think there are plenty of young taxpayers out there who’ve been working since age 16 or so, but who live in situations where they don’t pay the bills for whatever reason.

    I suppose I could have claimed the money anyway, but I really don’t like the idea of getting caught cheating on my taxes, even if the chances of it seem pretty slim.

  12. Scuba Steve says:

    I’d love to take advantage of all that free money but alas, I’ve never owned a land line in my life.

  13. Trai_Dep says:

    I didn’t realize so many Consumerist readers lived in a Kibbutz…

  14. teh says:

    @zahava: The credit also applied to cell phones. If you have a cell phone and didn’t take the deduction, you might want to fill out that form.

  15. iMike says:

    That $8B will run Bush’s war for about two weeks. Literally.

  16. IRSistherootofallevil says:

    Two weeks? Try a week. We now spend $1b a day on Bush’s war.

  17. Caroofikus says:

    @DadCooks: Instead of dividing it among everyone who filed, I vote that we split it between the people who cared enough to claim it in the first place.

  18. Crazytree says:

    @witeowl: You can take the $30 worthless standard deduction… while if you had all your tax records for the past 10 years you would likely be getting $500 or more.

    So Bzzt… spare me your crappy tax advice.

  19. JustAGuy2 says:


    It’s all one big pot of money.

  20. JustAGuy2 says:


    Well, since they were only refunding taxes paid since Feb 2003, I don’t see how 10 years of tax records would have helped. In fact, tax records wouldn’t have helped at all, you’d need to have your _phone bills_ to figure out how much tax you’ve paid. I’m not ashamed to say I don’t still have my phone bills from 2003.

  21. vitonfluorcarbon says:

    One time, at band camp……

  22. Crazytree says:

    @JustAGuy2: Should have been more clear.

    99% of people who have old phone bills have them as part of tax records, as ordinary and necessary business expenses.

  23. witeowl says:

    1) I dunno, but I figure $30-60 is a hell of a lot better than zip, and wouldn’t count as “screwed” in my book.
    2) Where’d the ten years come from? Your previous post (more accurately) said five. In fact, people unhappy with the standard deduction would only need bills going back to Feb 28, 2003. They can’t go back further.
    3) $500?!? Even using your false ten-year figure, that’s $50/year in excise taxes? I don’t know about you, but I know that I didn’t pay much that much in telephone excise taxes…
    4) If any business owners (the only ones likely to have paid more than $10/year) were silly enough to discard phone bills from within the past seven years, they deserve what they (don’t) get.

  24. MENDOZA!!!!! says:

    @pine22: ummm, it was a flat tax. your phone company doesn’t care how much you make.

  25. vex says:

    I keep a couple years of phone bills, plus important contract documents. No more. I took the standard deduction, as it just wasn’t worth the time to gather all the documents the IRS wanted for such a small refund. I say they just take that 4 billion remaining and pay off some national debt.

  26. theblackdog says:

    Could I make the claim based on living in my college dorm? After all, a part of my housing fee probably went to this tax.