Tax file: Take care with phone tax refunds

Taxpayers can file this year for refunds of federal tax paid on long-distance telephone service between March 2003 and July 2006. The Internal Revenue Service has prepared simplified filing procedures for many taxpayers, so they don't have to wade through years of old phone bills to calculate the tax on long-distance. (Local service is still subject to the 3% tax.) Nevertheless, taxpayers who want to claim an actual amount rather than use the IRS formulas may do so.

However, an IRS official warned on January 9 that the agency is “not walking away from cases that might seem extreme.” Businesses should be prepared to document any deductions taken beyond the formula amounts.