Federal Excise Tax Frequently Asked Questions
The Federal Excise Tax (FET) had been imposed on communications services at a rate of 3%. The term “communications services” is defined to include local telephone service, toll telephone service (based on time and distance) and teletypewriter exchange service. Bright House Networks had collected this tax for our Digital Phone service, in keeping with IRS guidance.
On Thursday, May 25, 2006, Treasury Secretary John Snow announced that the FET would no longer apply to nontaxable services, which are defined as bundled service and long distance service. In addition, Secretary Snow announced that the IRS would provide refunds directly to taxpayers for prior FET paid for the period beginning after February 28, 2003 and ending July 31, 2006.
What is FET?
The Federal Excise Tax (FET) is a 3% tax levied on certain communications services by the Federal government. Those communications services include local telephone service, toll telephone service (based on time and distance) and teletypewriter exchange service.
What has changed?
Based on definitions provided by the IRS, we concluded that Bright House Networks Digital Phone service was exempt from this tax because we offer bundled local and long distance calling for either a flat monthly fee or a charge that varies with the elapsed transmission time for which the service is used. Bright House Networks removed this tax from your bill by the July 31st, 2006 deadline.
How much have I been charged?
The FET is 3% of the cost of your Digital Phone service. In general, a customer who has purchased Digital Phone from Bright House Networks would pay an FET of about $1.20 per month, although this may be a few cents more or less depending on the other services you purchase from Bright House Networks.
Who is eligible to request the telephone tax refund?
In general, any individual, business or nonprofit organization that paid the tax for long distance or bundled service billed after February 28, 2003 and before August 1, 2006 is eligible to request the refund.
How will I receive my refund?
Under IRS guidance, you can calculate the actual FET paid on nontaxable services after February 28, 2003 and apply for a refund or credit, or you can claim a standard amount, somewhere between $30 and $60 based on exceptions claimed on your 2006 Federal income tax return which will be filed in 2007.
For further detail about this tax and how to file to receive your refund, go to http://www.irs.gov/newsroom/article/0,,id=161506,00.html
Can I get copies of my previous bills?
Since the IRS has offered a standard refund amount between $30 and $60, it is not required to gather old phone bills. If you choose the standard amount, you will only need to fill out one line on your tax returns. The standard amount is based on actual telephone usage data and the amount applicable to a family or other household reflects the taxes paid on long-distance or bundled phone service by similarly sized families or households. Using this amount may be the easiest way to you to get your refund and avoid gathering 41 months of old phone records. For further detail about this tax and how to file to receive your refund, go to http://www.irs.gov/newsroom/article/0,,id=161506,00.html.
If you chose to calculate your refund amount, Bright House Networks customers have access to billing statements through our Online Bill Pay system which you can access by choosing your local area below:
As a rule of thumb, a customer who has purchased Digital Phone from Bright House Networks for $39.95 would pay an FET of about $1.20 per month, although this may be a few cents more or less depending on the other services you purchase from Bright House Networks.
