Bye Bye Federal Excise Tax

"The U.S. Treasury Department said on Thursday it would concede the legal fight over the federal excise tax on long-distance telephone service, and require the IRS to issue refunds to consumers and businesses for proceeds paid over the past three years. The 3 percent tax originally was established in 1898 as a "luxury" tax on wealthy Americans who owned telephones, because the government needed to finance the Spanish-American war. The Treasury Department and phone companies say the tax on telephone calls is not compatible with communications in the 21st century. Treasury Sec. Snow also called on Congress to repeal the excise tax on local phone service as well. The end of the tax comes after a series of court rulings finding the government has been misapplying the tax, "The Wall Street Journal" reported in April. The Treasury Department said taxpayers will be eligible to apply for the refunds on their 2006 tax forms, which will be filed next year. The government will pay interest on those refunds. .