The IRS has announced that it will stop collecting the federal excise tax on long distance telephone services.

The IRS has announced that it will stop collecting the federal excise tax on long distance telephone services.

The agency announced last Thursday that the tax does not apply to long-distance service as it is billed today. The tax was first imposed in 1898 to help pay for the Spanish-American War. The current rate of 3% is charged on the service amount.

Taxpayers will be able to receive a refund of all excise taxes paid on long-distance services billed since Feb. 28, 2003. Interest will also be paid on these refunds. The IRS will soon announce a simplified method that taxpayers may use to minimize administrative burden.

"So taxpayers won't have to spend time digging through old telephone bills, we're designing a straightforward process that taxpayers may use when they file their tax returns next years," said IRS Commissioner Mark W. Everson. He said that claiming a refund will be a simple process.

The IRS says that local telephone service will remain under the federal excise tax. Other state and local taxes and fees paid will also remain in affect.

"Today is a turning point in the long battle to stop the levy for a war that ended 100 years ago," said Senate Finance Committee Chairman Charles Grassley (R-Iowa). "This tax hits every telephone owner, but it doesn't pay for any specific program. It now pours billions into the U.S. Treasury every year for no reason. It's time to hang up the telephone tax."

Martin Lukac (http://www.MartinLukac.com), represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!