The Telephone Excise Tax Refund and other changes affecting 2006 federal tax returns should be top-of-mind for businesses this time of year.
Here is some important information about the new refund, extended tax credits, and other important changes you need to be aware of this filing season:
Q. How do I know if my business qualifies for the Telephone Excise Tax Refund?
A. Your business qualifies for the Telephone Excise Tax Refund – a new, one-time refund that can be claimed for 2006 – if the company paid telephone excise taxes on long distance and bundled telephone services after February 28, 2003 and before August 1, 2006. Traditional land lines, cell phones and Internet packages for this time period can also qualify for the refund.
Q. My company paid telephone excise taxes during the time period that qualifies for the refund, but we don’t have all of our old phone bills. What are our options?
A. Businesses claiming the Telephone Excise Tax Refund have two options for computing the amount of the refund: determining the actual taxes paid for the period in question (which would require access to those old phone bills) or using a specific formula to calculate the refund amount.
To use the formula method, you will need phone bills from April and September of 2006, plus an accurate phone service expense figure for the entire time period qualifying for the refund. Caps may apply to this formula, based on the number of employees.
It is also important to note that sole proprietors, such as Schedules C, E, and F filers, with gross receipts under $25,000 cannot use the formula; they can, however, request the standard, exemption-based amount allowed by the IRS, which covers both personal and business phone expenses.
Q. My business is tax exempt, and we are not required to file a federal tax return. How can we still claim the Telephone Excise Tax Refund?
A. Use Form 990T, which will require a minimum amount of information in your case, to request your Telephone Excise Tax Refund.
Q. Have any of the expired 2005 business credits been extended into 2006?
A. Yes. Recent tax legislation has extended expired 2005 legislation through 2006, including the Research Credit, the Work Opportunity Credit, and the Welfare to Work Credit. For the Research Credit, be aware that the IRS has implemented changes in how 2006 research credits are reported, and on which forms.
Q. Are there any payroll issues our business should be aware of as we prepare our 2006 returns?
A. Yes. The new Form 940 includes changes affecting individuals not covered by state unemployment, provides new check boxes, and has been reduced to one page. Because the 940 is a scannable form, pay close attention to the instructions provided with the form.
Also, small businesses with an employment tax liability of $1,000 or less for the year can use the new Form 944 to report those taxes annually instead of quarterly – but you may use this form only if you have received notification from the IRS that you qualify. Otherwise, stick with the Form 941.
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Thursday, February 8, 2007
Telephone Excise Tax Refund for Business Owners
The Telephone Excise Tax Refund and other changes affecting 2006 federal tax returns should be top-of-mind for businesses this time of year.
Here is some important information about the new refund, extended tax credits, and other important changes you need to be aware of this filing season:
Q. How do I know if my business qualifies for the Telephone Excise Tax Refund?
A. Your business qualifies for the Telephone Excise Tax Refund – a new, one-time refund that can be claimed for 2006 – if the company paid telephone excise taxes on long distance and bundled telephone services after February 28, 2003 and before August 1, 2006. Traditional land lines, cell phones and Internet packages for this time period can also qualify for the refund.
Q. My company paid telephone excise taxes during the time period that qualifies for the refund, but we don’t have all of our old phone bills. What are our options?
A. Businesses claiming the Telephone Excise Tax Refund have two options for computing the amount of the refund: determining the actual taxes paid for the period in question (which would require access to those old phone bills) or using a specific formula to calculate the refund amount.
To use the formula method, you will need phone bills from April and September of 2006, plus an accurate phone service expense figure for the entire time period qualifying for the refund. Caps may apply to this formula, based on the number of employees.
It is also important to note that sole proprietors, such as Schedules C, E, and F filers, with gross receipts under $25,000 cannot use the formula; they can, however, request the standard, exemption-based amount allowed by the IRS, which covers both personal and business phone expenses.
Q. My business is tax exempt, and we are not required to file a federal tax return. How can we still claim the Telephone Excise Tax Refund?
A. Use Form 990T, which will require a minimum amount of information in your case, to request your Telephone Excise Tax Refund.
Q. Have any of the expired 2005 business credits been extended into 2006?
A. Yes. Recent tax legislation has extended expired 2005 legislation through 2006, including the Research Credit, the Work Opportunity Credit, and the Welfare to Work Credit. For the Research Credit, be aware that the IRS has implemented changes in how 2006 research credits are reported, and on which forms.
Q. Are there any payroll issues our business should be aware of as we prepare our 2006 returns?
A. Yes. The new Form 940 includes changes affecting individuals not covered by state unemployment, provides new check boxes, and has been reduced to one page. Because the 940 is a scannable form, pay close attention to the instructions provided with the form.
Also, small businesses with an employment tax liability of $1,000 or less for the year can use the new Form 944 to report those taxes annually instead of quarterly – but you may use this form only if you have received notification from the IRS that you qualify. Otherwise, stick with the Form 941.
Here is some important information about the new refund, extended tax credits, and other important changes you need to be aware of this filing season:
Q. How do I know if my business qualifies for the Telephone Excise Tax Refund?
A. Your business qualifies for the Telephone Excise Tax Refund – a new, one-time refund that can be claimed for 2006 – if the company paid telephone excise taxes on long distance and bundled telephone services after February 28, 2003 and before August 1, 2006. Traditional land lines, cell phones and Internet packages for this time period can also qualify for the refund.
Q. My company paid telephone excise taxes during the time period that qualifies for the refund, but we don’t have all of our old phone bills. What are our options?
A. Businesses claiming the Telephone Excise Tax Refund have two options for computing the amount of the refund: determining the actual taxes paid for the period in question (which would require access to those old phone bills) or using a specific formula to calculate the refund amount.
To use the formula method, you will need phone bills from April and September of 2006, plus an accurate phone service expense figure for the entire time period qualifying for the refund. Caps may apply to this formula, based on the number of employees.
It is also important to note that sole proprietors, such as Schedules C, E, and F filers, with gross receipts under $25,000 cannot use the formula; they can, however, request the standard, exemption-based amount allowed by the IRS, which covers both personal and business phone expenses.
Q. My business is tax exempt, and we are not required to file a federal tax return. How can we still claim the Telephone Excise Tax Refund?
A. Use Form 990T, which will require a minimum amount of information in your case, to request your Telephone Excise Tax Refund.
Q. Have any of the expired 2005 business credits been extended into 2006?
A. Yes. Recent tax legislation has extended expired 2005 legislation through 2006, including the Research Credit, the Work Opportunity Credit, and the Welfare to Work Credit. For the Research Credit, be aware that the IRS has implemented changes in how 2006 research credits are reported, and on which forms.
Q. Are there any payroll issues our business should be aware of as we prepare our 2006 returns?
A. Yes. The new Form 940 includes changes affecting individuals not covered by state unemployment, provides new check boxes, and has been reduced to one page. Because the 940 is a scannable form, pay close attention to the instructions provided with the form.
Also, small businesses with an employment tax liability of $1,000 or less for the year can use the new Form 944 to report those taxes annually instead of quarterly – but you may use this form only if you have received notification from the IRS that you qualify. Otherwise, stick with the Form 941.
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