May 25, 2006

WASHINGTON - Conceding defeat Thursday, the Treasury Department announced that it will stop collecting a telephone tax that federal courts have ruled illegal, and will cease efforts to overturn the court rulings.

"The excise tax was imposed to help fund the cost of the Spanish-American War back in 1898," said Rep. Tom Petri. "The war is over. We won. But we've still been paying taxes that were imposed."

"As a result of the Treasury Department's decision, the excise tax on long-distance telephone calls will no longer be collected. In fact, if people want to, they can get a refund of taxes that were paid in the last three years when they file their income tax returns next year," he said.

Petri acknowledged that the tax, which has been showing up on telephone bills for over a century, is small. "It depends, obviously, on the size of your long distance bill each month. It's three percent of your long-distance bills. And, for most people it doesn't amount to a whole lot each month, but it adds up. This is one for the taxpayer."

Text of Rep. Petri's comments provided to broadcasters:

"What happened was that the Treasury Department finally gave up after being told that their position was wrong by five courts, and as a result will no longer insist that an excise tax that appears on every telephone bill that every American gets each month will be collected in full.

"The excise tax was imposed to help fund the cost of the Spanish-American War back in 1898. The war is over. We won. But we've still been paying taxes that were imposed. And as a result of the Treasury Department decision, the excise tax on long-distance telephone calls will no longer be collected.

"And in fact, if people want to, they can get a refund of taxes that were paid in the last three years when they file their income tax returns next year.

"It depends, obviously, on the size of your long distance bill each month. It's three percent of your long-distance bills - an excise tax. And, for most people it doesn't amount to a whole lot each month, but it adds up.

"And, this is one for the taxpayer."

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