TAX FILE: Court hangs up on federal phone tax appeal

The 3% federal tax on long-distance phone service received another blow on March 30. That's when a three-judge panel of the U.S. Court of Appeals for the Sixth Circuit denied a government request to rehear its decision that the tax was invalid, in a case brought by OfficeMax. The panel reported that no judge of the appeals court had requested a vote on the suggestion that the full court rehear the case.

Earlier, after the original OfficeMax ruling and decisions by several other federal courts that the tax was invalid, Treasury Secretary John Snow said the government might stop fighting to retain the tax. He has not spoken about the issue since the latest ruling. Trucking businesses have more at stake than many companies, because the interstate nature of their work generates a large number of long-distance calls from employees and customers.