Early returns received by the IRS indicate many taxpayers are making mistakes when requesting the telephone tax refund. The telephone tax was institued in 1898 as a “luxury tax” but was recently ruled to be unconstitutional. Taxpayers are entitled to a refund equalling three years of actual Telephone Excise Tax paid or may claim the standard amount on the IRS forms.

Early mistakes found on a sample of 2006 returns filed during January include:

* Filling out the Form 1040EZ-T, Request for Refund of Federal Telephone Excise Tax, incorrectly by failing to show a refund amount on Line 1a. Designed exclusively for requesting the telephone-tax refund, this simple form is for people who don’t need to file a regular income-tax return. Filing an incomplete form typically delays a refund and often leads to follow-up correspondence with the IRS. More than 10 million low-income people, many of them senior citizens, are expected to file this form.

* Failing to request the telephone tax refund on a regular federal income-tax return in situations where the taxpayer appears to qualify. More than one-third of early filers did not request the telephone tax refund. This includes filers on Forms 1040, 1040A, 1040EZ, 1040NR and 1040NR-EZ. About 136 million individuals and couples are expected to file one of these forms, and most will, likely, qualify for the telephone-tax refund. Anyone who files one of these forms cannot file Form 1040EZ-T.

* Filing duplicate requests. Usually, this involves filing both Form 1040EZ-T and a regular income-tax return. Anyone who files a regular return cannot file Form 1040EZ-T. Doing so will delay any refund for months and result in a phone call or letter from the IRS.

* Requesting a refund that appears to be based on the entire amount of the taxpayer’s phone bills, rather than just the three-percent tax on long-distance and bundled service.

* Requesting a refund in the thousands of dollars, suggesting that the taxpayer paid more for telephone service than they received in income.

The IRS is investigating potential abuses among early filers who requested large and apparently improper amounts for the telephone tax refund. They will take prompt action against taxpayers who request improper refund amounts and the return preparers who help them.

For help in filing for the telephone tax refund, see the IRS website.

It’s tax season and a new crop of scammers are “phishing” across the internet. Many scams involve the scammer posing as representatives of the IRS. These scams have a higher success rate than some others. Not everyone receiving a scam email will have a Paypal or Ebay account nor do they bank at a particular financial institution. But everyone pays taxes (with a few exceptions).

Last year’s tax scam is still going strong. The taxpayer receives an email alerting him to a tax refund he is owed and directed to a site where he is asked to input personal information. The scammer then has what he was phishing for.

This year taxpayers are receiving emails stating that the recipient has been selected for an “e-audit”. Again, the purpose of the email is identity theft. The IRS states it does not conduct audits online and has no such program.

The IRS wants taxpayers to know that the IRS does not use e-mail to initiate contact with taxpayers about issues related to their accounts.

These scams are for the sole purpose of collecting sensitive personal identification about the recipient and often ask for social security numbers and credit card numbers. If you receive an email that purports to be from the IRS or if you have any questions regarding contact from the IRS, call 1-800-829-1040 to confirm it.

The IRS has expanded its Free File program this year. Taxpayers with an AGI (adjusted gross income) of $52,000 or less are eligible to e-file their tax returns for free.

That means that 70% (95 million) of all taxpayers will be eligible to file 2006 tax returns for no fee through one of the private sector tax software companies who are part of the Free File Alliance, LLC.

Free File for 2006:

* Free File is a free service offered by companies for taxpayers with an Adjusted Gross Income (AGI) of $52,000 or less.

* Before selecting a company link, review the tax software company’s criteria to confirm that you meet their eligibility for preparing and e-filing your federal return for free.

* Fees for state tax returns may apply. Some companies offer free state tax return preparation and e-filing. Check company websites for more details.

* Some companies offer extensions for free.

* Some companies offer free e-filing of the Form 1040EZ-T, Telephone Excise Tax Refund, for those who want to claim the refund credit and are not required to file a federal income tax return.

* You are under no obligation to buy any of the company’s other products or services.

To use the service, go to: Free File: Getting Started

No one likes paying taxes but some people will go to extreme lengths to avoid them, people like Ed Brown who has barricaded himself in his Plainfield, NH home after being convicted of tax evasion.

Brown is one of a large group of Americans who hold to the belief that income tax is unconstitutional and there is no law that requires citizens to file tax forms and pay taxes to the federal government.

Often cited by these anti-tax groups is their contention that the 16th amendment to the constitution was never properly ratified. Because not all the ratifying states used the exact same language or punctuation, the wording of the amendment ratified by most of the states differed from the original, with only four states ratifying the exact text proposed by Congress. Another argument made by some tax protesters is that because Congress did not pass an official proclamation recognizing Ohio’s year 1803 admission to statehood until 1953, Ohio was not a state until 1953 and therefore the Sixteenth Amendment was not properly ratified. Both of these arguments have been repeatedly rejected by the courts.

But Ed Brown still firmly believes that the government collects taxes illegally and refuses to comply with IRS regulations or recognize their authority. Brown, a former militia man who quotes the state’s motto “Live Free or Die”, plans to wait it out at his home which is equipped with generators, internet access and stocked with food. His home is also stocked with armed supporters, ready for US marshalls to descend.

The Sixteenth Amendment:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

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