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Stabenow Introduces Small Business Telephone Tax Refund Bill

Press Release

Date: April 17, 2007
Location: Washington, DC
Issues: Technology and Communication Business and Consumers Taxes



Bill would simplify process, give more time to small businesses filing for phone tax credit

U.S. Senator Debbie Stabenow (D-MI) today introduced the Small Business Telephone Tax Refund bill. The bill requires the Internal Revenue Service (IRS) to provide a more simplified process, similar to that for individuals, for small businesses to claim the new phone excise tax credit, while also extending the window for small businesses to claim this deduction. Small businesses and their tax preparers have complained that because of the complicated filing requirements under current law, the potential cost of claiming this credit would likely be much greater than the actual value of the refund, and as a result, many have not bothered to take the credit.

"Small business owners are the backbone of our communities, and they deserve simple and timely access to the telephone tax refund," said Stabenow. "Individuals across the country are receiving this tax refund, and we need to make the system works just as well for our small businesses."

The IRS will refund approximately $13 billion in excise taxes on long distance and bundled services to individuals and businesses in 2006. This refund will be the most wide-reaching in IRS history — more than 160 million filers may request it. According to the Padgett Foundation, of those businesses that have filed their tax returns, less than a third has taken the credit. The reason for this being the IRS requires them to access 41 months of records in order to receive the refund owed to them - a time consuming and costly process. The IRS estimates it would take small businesses an average of 13 hours and 37 minutes to compile the necessary paperwork and compute the refund.

The Stabenow Small Business Telephone Tax Refund bill would mandate that the IRS keep the refund period open through the year for both individuals and small businesses and provide a small business safe harbor similar to that provided to individuals.


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