News-Record.com

The IRS says some taxpayers have requested a refund of all their phone bills for the 41-month period covered. In other cases, individual taxpayers have asked for thousands of dollars back - claiming phone bills that topped their income for the eligible period.

And the IRS says some of these mis-filers aren't flying solo. Apparently, some tax preparers aren't getting the tax right, either.

So, to reiterate, here's the deal:

INDIVIDUAL TAXPAYERS:

* Can take a standard deduction based on exemptions. This is the easy way out, and if your long-distance, taxable phone bills were less than about $50 a month during the 41-month period, this probably is your best option. The deductions are $30 for one exemption, $40 for two, $50 for three and $60 for four. If you're a single person with one exemption, that means you get $30 if you go for the standard credit.

* Can add up the tax on their long-distance phone bills for 41 months and request that specific amount. Web sites like this one can help you do that - but you'll have to pay a fee, which doesn't make financial sense unless you're expecting a huge amount of cash back.

* The credit comes back with your refund. If you owe the Feds money, the credit will shave dollars off your check to the IRS. If you're owed by the government, the credit will be tacked on to what you get back.

BUSINESSES AND TAX-EXEMPT ORGANIZATIONS:

OK, this one's a bit more complicated - and we didn't go into detail about it in our Monday story, which was aimed more at consumers. But I'll try to sum the procedure up here.

* The refund is capped at 2 percent of phone expenses for businesses with fewer than 250 employees and capped at 1 percent for businesses with more than 250 employees during the pay period that included June 12, 2006.

* There's a short-cut formula here, too. It not only applies to businesses and tax-exempt groups, but also to individual owners of rental property, self-employed people, independent contractors and farmers who are reporting gross rental and business income greater than $25,000 on their 2006 federal returns. You must have been running your business during part of the 41-month period, and you must have been in business from April through September of last year to use the formula. Here's how it works:

-- Take your April 2006 phone bill (a month when the Feds still were collecting the tax) and divide the total federal telephone excise tax paid by the total phone bill to get the percent of the bill accounted for by the tax. If you've got bundled services, combine all your April bills and perform the calculation.

-- Then, take your September 2006 bill (a month when the government was only collecting the tax on local service, which is not eligible for the credit) and divide the total federal telephone excise tax paid by the total bill to get the percentage of tax paid.

-- Subtract the September figure from the April figure to get a new percentage.

-- Multiply that percentage by your total phone expenses paid on bills dated after Feb. 28, 2003 and before Aug. 1, 2006.

* The other method is to add up the actual taxes paid on 41 months of bills. This will be easier for businesses to do than for individuals, as companies are more likely to have those phone records than are individual taxpayers.

* In case of an audit, businesses need to keep copies of their phone bills from April and September of last year. They also need to keep records of business phone expenses for the 41-month eligible period. And they also need to have records on the number of people they employed during the pay period that included June 12, 2006. Don't send the documents to the IRS with your return, though.

* Here's the form. This form also can be used by individuals who decide to calculate their credit instead of taking a standard deduction.