How Much Money Are You Willing to Leave Behind?

Here are two examples of how the IRS' business estimation method will adversely affect FET refunds:

Example 1:
Total Apr. 2006 Phone Bill: $5,000 = $144 paid FET = 2.8% of total bill
($3,120 local taxable & $1,680 LD/cell taxable)

Total Sep. 2006 Phone Bill: $5,000 = $ 24 paid FET = .4% of total bill
($800 local taxable & $4,000 LD/cell non-taxable)

percentage difference = 2.4%

This is the percentage difference to be applied to every month's total bill for the entire 41- month period. However, the IRS has placed a 2% cap on the differential percentage. Therefore your business will lose .4% of the monthly tax amount to which you are entitled for each of the 41 months.

Example 2:
Total Apr. 2006 Phone Bill: $6,000 = $174 paid FET = 2.9% of total bill
($2,900 local taxable & $2,900 LD/cell taxable)

Total Sep. 2006 Phone Bill: $6,000 = $ 87 paid FET = 1.4% of total bill
($2,900 local taxable & 2,900 LD/cell non-taxable)

percentage difference = 1.5%

Again, apply the 1.5% differential percentage to all bills in the 41-month refund period:

Total July 2005 Phone Bill: $8,000
($1,500 local taxable & $5,300 LD/cell taxable)
Estimation Method: $8,000 x 1.5% = $ 120
Actual LD/cell paid: $5,300 x 3% = $ 159
FET loss using Estimation Method: $ 39

If this amount were lost each month ($39 x 41 months), your business would lose $1,599 -- which represents a 25% loss of the refund you're owed.

If you use the IRS' estimation method...

...the greater your long-distance and cell usage is over local usage between April and September 2006, the more FET refund you'll lose. And, the greater the long-distance and cell usage was over local usage in the past compared to the two-month estimation period, the more FET refund you'll lose.

Looking for an alternative? UAC can help...read on.

FET Refund Estimation Method Leaves Billions on the Table

Tax recovery expert Byron Horner says IRS' method will only return a fraction of the amount owed to taxpayers.

Upstate SC---November 16, 2006--- Byron Horner, President of Utility Audit Company, Inc. (UAC), stated today that the estimation method approved by the IRS for businesses to use in figuring their Federal Excise Tax (FET) refund will not return all of the money owed. "There are significant problems with this method," Horner commented.

Although the IRS is allowing businesses to estimate the amount of FET paid based on a comparison between their April and September 2006 phone bills, "there is a cap on the total phone expenses a business can claim," Horner explains. "Businesses with 250 employees or less can claim 2% of their total phone expenses, while businesses with more than 250 employees can only claim 1% of their expenses."

Results of the estimation method will vary based on the usage pattern for each business and how consistent that pattern has been over the past 41 months. “If your long-distance usage was higher than the local usage in the past but was not in April and September, this method is unlikely to return the full amount of FET owed,” Horner states. “The IRS admits that businesses and tax-exempt organizations have more varied phone usage patterns than individuals. Yet their estimation method only offers 2 specific months as a basis for calculating the entire 41-month refund—one month immediately before the tax ended and one month immediately after. Any large shifts between those two months in local and long-distance usage will tilt the differential percentage, which can lower the refund for the entire period.”
Horner also mentions another key point: “if the differential percentage comes out to be more than 2%, the excess percentage will represent lost FET refund money. Larger businesses that are capped at the 1% differential have little choice but to invest the time and resources to do the research and claim the actual amount of FET they paid.”

In order to request the actual amount of tax paid, businesses must be able to back up their claim with accurate records and phone bills for the past 41 months. “For businesses with multiple phone lines and cellular phones, this process will be extremely tedious and time-consuming,” Horner explains. “They may not think it’s worth the time, and opt for the IRS estimation method. However, if they do, they may very well leave money on the table.” “Businesses need to know that there are tax experts and companies out there that will review and calculate their refunds in a fraction of the time, making sure they get all their money back from the IRS,” Horner adds. UAC has worked with businesses in preparing FET refund claims ranging from $4,000 to $200,000.

Utility Audit Company (UAC) specializes in helping businesses and tax-exempt organizations recover taxes. As experts in utility and phone taxes, UAC has the knowledge to quickly and effectively prepare FET refund claims and help businesses get the refund that is legally owed to them by the IRS. For more information and questions about the Federal Excise Tax refund process, visit http://utilityauditco.com or call Byron Horner at (866) 457-4262.

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IRS Owes Businesses Billions in Federal Excise Tax Refunds

Landrum, SC – October 17, 2006 - On August 31, 2006 the IRS announced the standard Federal Excise Tax (FET) refund amounts it will allow individual taxpayers to claim without documentation on their 2006 federal income tax returns. The IRS says it is also considering an estimation method for businesses to use for figuring the tax paid.

Individual taxpayers can claim a standard ‘opt out’ amount offered by the IRS for their FET refund - $30 - $60 based on the number of dependents. Byron Horner, President of the Utility Audit Company, Inc., a company specializing in tax recovery, says that represents only 65% of the actual amount owed based on research using FCC information. At this point however, businesses may only request the actual amount of tax paid and must back up their claim with accurate records and phone bills for the past three years. “For even small businesses with several phone lines and cellular phones, this process required by the IRS will be extremely tedious and time consuming,” Horner stated. “Although the IRS is working on an ‘estimation method’ for businesses to use in lieu of doing the research, if they offer the same 65% to businesses that they’re allowing individuals, businesses will leave billions of dollars on the table,” Horner noted.

Horner, a tax recovery expert with 14 years’ experience in utility and phone audits, estimates that the process of compiling, reviewing and identifying the information required to determine the accurate amount to claim will take an average-sized organization 20 hours or more. “Each telecom carrier identifies FET differently on their bills and some provide no summary of taxes paid, making it very difficult for someone who is not familiar with the various phone bills to find the necessary information,” Horner said. “Making it even more difficult for businesses, the refundable tax is only on long-distance service, not local phone service, meaning the two have to be separated in order to calculate the exact amount of FET they paid and can claim.”

A refund of the three percent tax over the forty-one month period allowed by the IRS results in slightly more than a one-to-one ratio in determining the amount an organization can expect for its refund. For example, if an organization spends an average of $10,000 a month on long-distance service, they can expect a refund of approximately $12,000. “However, if the IRS only offers businesses the same 65% it’s allowing individuals, that amount will only be $7,800.” “Smaller organizations may think it’s not worth the time and hassle to compile the information for a refund the way the IRS has set this process up,” Horner explained. “They need to know that there are tax experts and companies available to review and calculate refunds in a fraction of the time it would take them to do it internally, making sure that they get their all money back from the IRS,” he added.

Horner offers these tips for businesses to claim the full FET refund their business is owed:

1. Start NOW. Businesses need to compile information and prepare documentation now before the hectic tax season arrives and this one-time opportunity is missed. Because of the magnitude of this refund (every business in country is owed this refund), the experts and companies that do this type of work will be inundated after the first of the year. Don’t wait. Make arrangements early to have your refund prepared.

2. Gather Phone Bills. Begin compiling past billing data including all phone records and telecom service bills for the period between February 28, 2003 and August 1, 2006.
Carefully Evaluate Each Bill. The Federal Excise Tax is identified differently on each carrier’s bill. Businesses must separate long-distance and local service federal excise tax, as the refund only applies to FET paid on long-distance service (and cellular service).

3. Recruit Professional Assistance. Contact a tax recovery expert to save you time and ensure that your organization is getting the full tax refund money it is owed by the IRS. Remember to make arrangements now before these professionals become overbooked and your FET refund preparation is delayed due to backlogs.

Utility Audit Company (UAC) specializes in helping organizations, both business and non-profit, recover taxes incorrectly paid as well as identify exemptible taxes and have them immediately stopped on current accounts. As experts in utility and phone taxes, UAC has the knowledge to quickly and effectively prepare FET refund claims and help businesses get the full refund that is legally owed to them by the IRS. For more information and comments on the Federal Excise Tax refund process, visit www.utilityauditco.com or call Byron Horner at (866) 457-4262.

Your Way or Theirs?

Every business needs to ask themselves this question:

Which way are we likely to get more of our money back: accepting whatever FET "estimation method" the IRS comes with, or using a service like UAC to calculate the exact amount we're owed? Is it worth investing 20% of our refund (UAC's fee) to get the full amount we deserve?

Make a decision now about which option will work best for your business. If you choice is to get all of your FET refund, contact UAC now and have the results in time for tax season.

Washington Post Article on FET

Here's what The Washington Post had to say about FET refunds. (We were interviewed for the article, but alas, didn't make it to print.)

IRS Quantifies Refund Amounts

Well, here's the smoking gun. The IRS announced late last week that the individual opt-out amount for FET refunds will be $30-60 (which includes interest). This is about what we figured.

Business taxpayers, however, are still in the dark. Although the IRS "is considering" an estimation method for businesses, nothing has been decided. (Note our sources tell us the IRS will calculate the interest due for businesses based on refund amounts.)

So what is your business supposed to do to claim its FET refund? Blog us here or contact us with questions and comments.

The Scoop on FET

On May 25, 2006, the US Treasury made an important announcement: due to the increasing legal activity over the Federal Communications Excise Tax (FET), it would cease charging the tax on long-distance and cellular service. Carriers have until August 1, 2006 (that's Monday, by the way) to change their billing and stop collecting FET. What's more, every taxpayer in America--from you and me to the companies we work for--is entitled to claim an FET refund on their 2006 income tax returns. In essence, the government has given up a billion-dollar revenue source. And $13 Billion is available in refunds.

Getting your refund, however, isn't going to be as easy as you'd think. As with most IRS "offers," you have to read between the lines to get what's really coming to you. If you're an individual taxpayer, you have a choice: (1) you can just claim the standard opt-out amount (see this) on the "FET Refund" line. But (2) if you actually want the full amount of FET you paid over the last three years, you're going to have to prove it: pull out 3 years' worth of bill copies, calculate your FET payments to the penny, and then claim your amount paid. Oh, and you'd better keep your records in case you're audited. Naturally, most Americans don't have three years' worth of old telephone bills--which is precisely what the IRS is betting on.

Business taxpayers have it even harder. The IRS isn't going to let them claim an opt-out amount at all. If they want their FET back, they're going to have to dig out their long-distance and cell phone bills for the last three years, cull through them to isolate FET only charged on long-distance (not local) calls, and then claim the amount. As with individuals, the IRS is banking on the assumption that most businesses won't want to invest the time and resources to claim an FET refund.

But with $13 Billion at stake, isn't it worth it? We think so. Read on to find out more.

FET Refund Preparation Service

Your business may be sitting on a pile of money without knowing about it.

It's your Federal Excise Tax (FET) refund, and UAC can help you pocket it. Our tax recovery experts take the headache and time commitment out of getting your FET refund prepared:

1) Send us each month’s summary pages from your paid long distance and cellular bills for the period of March 1, 2003 through July 30, 2006.

2) We’ll organize your bills, schedule the tax you paid by account and month, and return a concise package to you with the total amount to claim on your tax return.

The IRS is banking on the assumption that your business won't want to invest the time to get what you deserve. Let us help you prove them wrong. For more information, visit us online.