The refund, which is available this year only, stems from a court decision that found that the telephone excise tax, which was first put on the books in 1898 to help pay for the Spanish-American War, was no longer applicable. Taxpayers can claim a refund based on the 3 percent excise tax they paid on long-distance calls from March 2003 through July 2006.
But the IRS is finding that the refund is being claimed on only 69 percent or 79 percent of returns, IRS Commissioner Mark Everson said at a National Press Club luncheon Tuesday. While not every taxpayer is eligible for the refund, the IRS expected to see more claims.
"We think some people may have skipped over it on the form - even with the software, in some instances - just completing the return as they did last year. We've been surprised by that," Everson said.
Depending on the circumstances, taxpayers can file for a refund of as much as $60 without having to produce any paperwork. For example, a taxpayer filing with one exemption can claim $30; two exemptions, $40; three exemptions, $50; and four or more exemptions, $60.
For example, a married couple filing a joint return with two dependent children would be eligible for the maximum standard amount of $60.
Taxpayers seeking bigger refunds must produce old phone records to back up their claim. While some taxpayers may be missing out, Everson said the IRS also saw what appeared to be early efforts to fraudulently claim the refund, with some taxpayers allegedly falsely claiming more than $10,000 in refunds.
"That's a lot of phone usage. Even my teenage kids can't generate that much phone usage," Everson joked.
A crackdown by IRS agents earlier this year appeared to chill such efforts, Everson said.
Everson said the agency has responded well to factors that promised to make this spring one of the most complicated filing seasons in memory. Among the complications, Congress waited until late in 2006 to retroactively extend a number of tax breaks that had already expired.
Also, the IRS for the first time has allowed filers to split their refund and have it sent electronically to different financial institutions, Everson noted, adding that Congress didn't approve the budget for the IRS and many other agencies until February - four months into the current fiscal year.
"I would suggest to you, with three weeks to go, so far so good," Everson said.
Electronic filing remains on the rise, he said, and the agency managed to work the renewed tax provisions into its own software and worked with companies that provide software packages to filers by the beginning of February, he said.