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Telephone Excise Tax Refund

The Telephone Excise Tax Refund (TETR) was implemented to return excise taxes collected on long-distance phone service between February 28, 2003 and August 1, 2006. The refund was a one-off that can only be claimed on a 2006 tax return.

The TETR followed from a federal court decision which stipulated that the telephone excise tax must only apply to local service. Therefore, the IRS refunded the tax charged on long-distance segment of total telephone charges as well as on bundled service that did not differentiate between local and long-distance calls.

Most phone customers, including fixed phone, mobile, and Voice over Internet Protocol (VoIP) service customers, were eligible to receive the refund. In 2006 more than 70% of eligible taxpayers claimed it.

Late 2006 tax filers can choose either the standard amount set by the IRS or the actual amount they paid in excise taxes, whichever is higher. However, the refund request cannot exceed 3% of the total amount of the long-distance or bundled service.