Discussion:Anyone's corporate clients going to mess with the Telephone Excise Tax?

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Tax Questions --> Anyone's corporate clients going to mess with the Telephone Excise Tax?


KENDRICK (talk|edits) said:

6 February 2007

KENDRICK (talk|edits) said:

6 February 2007
So far none of my corporate clients want to mess with it. Just curious to know if anyone's corporate clients want to spend the time to get this credit. I heard the IRS is working on a simple method for corps like for individuals.

Janakpatel (talk|edits) said:

6 February 2007
Estimation method saves time and very easy to use.

CATAXES (talk|edits) said:

6 February 2007
Managed to get client a $1300 tax credit with little work. All you need are the April and Sep 06 phone bills. Can apply resulting % to G/L telephone account. Bingo. IRS allows you to take 1/12 of anual phone expense as monthly entry for Form 8913.

PGattoCPA (talk|edits) said:

6 February 2007
CATAXES: Do you mean 3/12 of the annual for quarterly entry on the 8913?

CATAXES (talk|edits) said:

6 February 2007
Yes.

Nairin (talk|edits) said:

February 6, 2007
I called Verizon in the last week of Jan 2007 and was told that in a month or so they planned on including in phone bills a summary of the 3% excise tax charged for the 41 month period. I also tried to call AT&T 3 times. They promised me a representative would return my call; so far I've heard nothing.

Corptaxhelp (talk|edits) said:

February 7, 2007
A company for which I consult received a $5,700 credit for about two hours work looking at old bills. Not a bad return if you ask me.

Mark Eason (talk|edits) said:

7 February 2007
I have had one client figure it on their own, just under $150. Another has given me April and September bills.

PVVCPA (talk|edits) said:

8 February 2007
$1,300! $5,700! How much were the average monthly bills?

We just finished our first one for one of our business clients, with an average monthly bill around $1,250 (local + long). And their credit was only $165.

$165 was not worth it if we take into account our time corresponding with the client to get the right bills, their time finding the April & September bills, our time analyzing their general ledger to get the right numbers in the right boxes, plus our time to prepare the form and have our reviewer review it.

The $165 makes my individual standard credit of $60 seem like a steal, since my household monthly phone bills are less than $100/month.

WesR (talk|edits) said:

8 February 2007
Hi I agree $1300, $5700 sounds like a preparer screw up Ive seen nothing but under 250. Must be a "marriage toll free counseling number" :) bye

Dennis (talk|edits) said:

8 February 2007
Idle curiousity. 6/30 corp. Do you take the credit for the last month on the 8913 (7/06)?

Kevinh5 (talk|edits) said:

8 February 2007
wouldn't you take the credit on the 06 tax year return? I had a 9/30 client and it was his '05 year, so I didn't take the credit.

Corptaxhelp (talk|edits) said:

February 8, 2007
PW: The $5,700 client was paying $90,000 or so a year in telecom charges. It was the secretary in the telco department who took it upon herself to do the research. For her efforts, she got a $2,850 bonus -- half the credit received and roughly five weeks of her normal pay. The company was pleased with the credit. The secretary was ecstatic.

PGattoCPA (talk|edits) said:

8 February 2007
A question at the end, slightly tongue in cheek . . .

$ 90,000 total telecom charge per year x 61.8% = long distance portion $55,610 long distance charges per year / 12 months per year = $4,634 long distance charges per month x 41 months in applicable period = $190,000 total long distance charges in applicable period x 3% long distance excise tax rate = $5,700 excise taxes paid and, therefore, refundable x 50% bonus rate = $2,850 bonus / 2 hours of work = $1,425 per hour.


And what do most CPAs / EAs / professional preparers charge for doing value added work? <VBG>

Natalie (talk|edits) said:

February 11, 2007
That's great news about the secretary. It's so nice to hear about instances where a company rewards its employees for taking the initiative to do these kinds of things.

Blrgcpa (talk|edits) said:

11 February 2007
I used the estimate for an s corp. Just a click of the computer gave me the totals for the years in question.

You have to use months, not quarter years because they want Dec, Jan, Feb as a 3 month period.

It's worth doing.

JR1 (talk|edits) said:

February 11, 2007
I'm confirming tho' that to be worth doing, the LD charges must be 3-4k per year...

PVVCPA (talk|edits) said:

13 February 2007
We have a new "simplified" estimation method: Ask the client how much their average monthly phone charges are (this you probably already know) and then ask them how much there average long distance is.

With these two variables you can prepare a Form 8913 that will get you awfully close. You can deal with the $10 that you are off at the audit, if there is one.

Heck, isn't this what we do with the Form 8829?..."How much are your average monthly utilities?" We don't make them bring us twelve months of utility bills.

Deback (talk|edits) said:

February 13, 2007
PVV - I agree and said this recently in another telephone tax thread. Regarding utilities on Form 8829, I have the client add up their utility bills, leave them at home, and give me only the total for the year.

PVVCPA (talk|edits) said:

13 February 2007
Darn it! I thought I was so smart, too.

Deback (talk|edits) said:

March 2, 2007
Total 2006 phone bills for my largest C-Corp were $9,970. There's no way I'm going to take the time to ask her to go through her phone bills. I'm thinking of just going with 2% of the total bills or $5 per month. Is anyone else doing something similar to this?

JR1 (talk|edits) said:

March 2, 2007
yep

Deback (talk|edits) said:

March 2, 2007
Thanks, JR.

Speaking of DPAD, this client got a $544 deduction when not using the simplified method and 0 deduction when using the simplified method. Net income was too low with the simplified method.

Seakev (talk|edits) said:

22 March 2007
I want to see the reaction from our clients next year when they have to turn around and claim the credit as income on next years return....A little tid bit that is not being published to the public as of yet.

Vbcpa (talk|edits) said:

22 March 2007
The IRS giveth and the IRS taketh away :)

To join in on this discussion, you must first log in.
Personal tools