Tax Refunds-Tax Returns

Government Moves to Curb Telephone Tax Refund Fraud ; Tax Preparers Indicted in Four States, One Enters Guilty Plea.

WASHINGTON — Moving to curb abuse of this years one-time telephone excise online tax refund program, the Justice  Department and the Internal Revenue Service obtained federal indictments this  spring against tax preparers who allegedly filed thousands of dollars in  fraudulent refund claims.

In recent weeks, the alleged federal tax refund status schemes involving  preparers in Miami, Fla., Norcross, Ga., Dallas, Texas, and Riverside, Calif., led to federal indictments. This week, the defendant in the Miami case pled  guilty to one count of making and presenting fraudulent federal income tax refund claims to the IRS. The indictments stemmed from search warrants carried out this winter by special agents from IRS Criminal Investigation.

We saw limited but serious instances of abuse IRS  Acting Commissioner Kevin M. Brown. “We used our enforcement resources to move  swiftly and decisively to protect this valuable refund for the vast majority of  taxpayers and tax preparers who are requesting it properly. We want everyone  who is eligible for free efile tax return the telephone tax refunds to get it but not to inflate the amount requested.

The IRS has been monitoring telephone excise state tax refund requests for potential problems. Shortly after the tax-filing season opened in early January, the agency observed problems with returns  from some tax preparers that indicated possible criminal intent. Along with the  search warrants carried out by the IRS, other tax preparers across the nation who prepared questionable telephone rapid tax refund requests received visits from IRS revenue agents (auditors) and special agents. The IRS has  advised taxpayers to stay away from unscrupulous promoters and tax preparers  who make false claims about the telephone tax refund and suggest that many, if  not most, phone customers can get hundreds of dollars or more back under this free efile program.

At the same time, the IRS this year urged taxpayers filling  out their 2006 returns not to overlook the telephone tax refund. About 30 percent of taxpayers did not request this special refund so far this year, and although some of them may not be eligible, others may qualify and not know it. The IRS urges eligible taxpayers who already  filed, but overlooked the refund, to request it by filing an amended return on Form 1040X.

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. Officials also authorized a one-time refund of the federal excise tax paid on state tax preparation billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006. The tax continues to apply to local-only phone service.

To make the refund easier to figure, the government established a standard refund amount, based on personal exemptions, ranging  from $30 to $60. If taxpayers have phone bills and other records, they can request the actual amount of excise tax paid. Though using the standard amount is optional, it is easy to figure and approximates the eligible amount for most individual taxpayers. Taxpayers only need to fill out one line on their return, and they do not need to present proof to the IRS.

The most reliable information on this unique refund can be  found in the Telephone  Excise Tax Refund section on this Web site. There, taxpayers can  download forms, find answers to frequently-asked questions and link to  participating private-sector Free  File partners offering efile for free services.