May 25, 2006

US to repeal long-distance phone tax

WASHINGTON (Reuters) - The U.S. Treasury Department on
Thursday conceded defeat in a legal dispute over the federal
excise tax on long-distance telephone service and said the
Internal Revenue Service will refund tax paid on the service
over the past three years.

In a statement, U.S. Treasury Secretary John Snow also
urged Congress to repeal the excise tax on local telephone

The Justice Department will no longer pursue litigation on
the long-distance issue, the statement said.

The Treasury Department said taxpayers can claim a refund
on their 2006 returns for the long-distance tax, which was
established in 1898 as a luxury tax on wealthy Americans who
owned telephones.

According to a Wall Street Journal report, the decision
will lead to billion of dollars in refunds to U.S. consumers
and businesses who have paid it, with the impact of the refunds
and lost revenue over the next five years amounting to some $60
billion. The Treasury statement did not cite a figure.