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TBRC Cost Recovery, LLC
A Shanholt, LLC Affiliate
575 Lexington Ave., 19th Floor
New York, NY 10022



FREQUENTLY ASKED QUESTIONS




What is the Federal Telephone Excise Tax?
Why am I entitled to a refund?
How much of a refund will I receive and why is this software necessary?
What about for businesses?
Won't my accountant take care of this for me?
What if I don't have all 41 months of bills going back to March 2003?
How does Phone Tax Refund Calculator© work?
What are the features of each module?
How accurate is Phone Tax Refund Calculator©?
What else do I get with Phone Tax Refund Calculator©?
What are the system requirements to use Phone Tax Refund Calculator©?
What is the refund/exchange policy for the software?
What does Phone Tax Refund Calculator© cost?
Why is it priced so low?
Who is TBRC Cost Recovery, LLC?
What other services does TBRC Cost Recovery, LLC offer?
Do you offer an affiliate program for Phone Tax Refund Calculator©?
What if I have more questions?


What is the Federal Telephone Excise Tax?

In 1898, Congress imposed a tax on telephone service to fund the Spanish-American War. Over the ensuing years, after the war ended, the tax was repealed and re-instated several times. In 1965, Congress re-instated it permanently. Ever since, telephone carriers have collected this 3% tax on almost all telecommunications services.

The Internal Revenue Code (Section 4251) imposes the tax on local telephone service and “Toll” telephone service. The code goes on to define “Toll Telephone Service” as “a telephonic quality communication for which there is a toll charge which varies in amount with the distance and elapsed transmission time of each individual communication”.


Why are you entitled to a refund?

The law says that a call is taxable if the price varies with the time AND distance of the call. At the time that the law was written, the per-minute price of a long distance call varied based on the distance between the caller and the recipient. A call from New York to California cost considerably more than a call from New York to Pennsylvania. By the early 1990’s, every carrier had migrated to a single-rate system, and distance was no longer a factor. However, nobody noticed the discrepancy and carriers continued to collect the tax.

In the late 1990’s, either an attorney or a telecom consultant discovered the loophole in the wording and filed for a refund on behalf of their client. The IRS denied the claim and subsequent appeals, claiming that “Congress really meant” for the tax to apply. The client sued the government in U.S. District Court. Several similar claims were filed by other companies, as well, and were also denied, leading to more lawsuits against the government.

The IRS lost every single case on this matter but appealed to higher and higher courts (they did win one case at first, but it was later overturned on appeal). They finally conceded that the tax doesn’t apply to non-local calls in May 2006 and instructed carriers to stop collecting it after July 31, 2006 (it still applies to local service, though).

Since the statute of limitations for tax refund claims is 3 years from the due date of a return, the IRS is allowing claims as far back as March 1, 2003. Claims must be filed on your 2006 tax return via Form 8913.

The Federal tax on wireless service is also included in the refund and for reasons unknown (but welcome, nonetheless), the IRS is allowing a refund for the tax paid on “bundled” service (i.e. flat rate for local and long distance), even though, in my opinion, the law specifically taxes it (but hey, we'll take what we can get, right?).

How much of a refund will you receive, and why is this software necessary?

The government is offering a "safe harbor," or "no questions asked," refund of $30-$60, based on the number of exemptions claimed on the 2006 tax return ($30 for 1 exemption, $40 for 2, $50 for 3 and $60 for 4 or more). However, for individuals and non-corporate businesses, the full refund will be approximately 1.4 to 1.5 times one month’s average pre-tax bill (3% x 41 months = 123% plus interest = 140% to 150%). For a wireless customer that pays a base monthly fee of $69.99 (and has done so since March ’03), the refund will be at least $100. Phone Tax Refund Calculator© computes the higher amount and reduces the process to minutes, not hours.

What about for businesses?

For businesses, the amount of time it takes to calculate the refund and interest will also depend on how many different accounts are billed to the company.

Since businesses come in all sizes, it stands to reason that their phone bills do too. Some businesses don't even have a phone bill (i.e. real estate entities that are managed by a central management company). Others, such as Fortune 1000 corporations, spend millions of dollars each month on their telecom. Accordingly, it would be impossible for the IRS to offer a standard refund amount. Therefore, they came up with what I think is a fair formula (at least for businesses with 250 or fewer employees). It's called the "Business Estimation Method" and it's computed as follows:

  1. Pull out all telephone bills from April and September 2006 only, including your bills for local service (one is from before the tax was repealed, the other is from after).
  2. Determine the federal tax as a percentage of the whole for both months.
  3. Compute the difference between the 2 percentages.
  4. Determine the amount of telephone expense reported on your 2003-2005 tax returns (and the amount that you plan to report on your 2006 tax return).
  5. Divide each of these numbers by 12 to determine the average monthly amount.
  6. Group the amounts into 3-month quarters as follows: March-May, June-August, September-November and December-February (Obviously, these are not calendar quarters). Then multiply each quarter by item #3 (maximum 2% for small businesses, 1% for larger companies) to arrive at the amount of tax assumed to have been paid. Because of these limits, I recommend that larger companies use the "Actual" method to compute their refund.
  7. Complete Form 8913 and compute the interest for each quarter separately (there are 14 quarters). Interest must be computed to the date of filing + 45 days, referring to the tables in Internal Revenue Bulletin 2006-40, using daily compounding.
Unfortunately, while this method is reasonably accurate compared to examining 41 months worth of phone bills, it's still no simple task. It seems to me that while the government may have conceded that they owe us the money, they're making it rather difficult to claim. And the Actual method isn't much better.

In brief, the “Actual” Method requires you to:
  1. Pull out up to 41 months of telephone bills, going back to March 1, 2003.
  2. Locate the federal tax on each bill.
  3. Compile a list of the federal taxes paid for each month, separating them into the correct categories of “Long Distance” and “Bundled Service”. Figuring out the column in which to list the federal tax on other services (i.e. toll-free, conferencing, etc) can be a challenge.
  4. Group the amounts into 3-month quarters (March-May, June-August, September-November and December-February).
  5. Compute the interest using IRS tables from Internal Revenue Bulletin 2006-40, using daily compounding. These rates change every calendar quarter.
  6. Complete Form 8913 and compute the interest for each quarter separately.
Whichever business calculation method is used (either the Actual method or the Business Estimation method), since the tax is 3% and the refund period covers 41 months, you will receive (including interest) approximately 135%-150% of your average monthly pre-tax costs for long distance, toll-free, conferencing and wireless service.


What if I don't have all 41 months of bills?

That depends on how well you can document the amount you paid. For example, if your wireless plan costs $69.99 per month before taxes, it's a safe bet that even if you're missing some bills, you probably paid at least $2.10 in Federal tax for those months ($69.99 x 3% = $2.10). This position would likely stand up to an IRS audit as long as you can establish that the missing months are within the time period of your wireless contract or that the surrounding months had similar charges. For bills that vary each month (i.e. long distance service), you might estimate the amount of tax paid in a month for which you're missing the bill by looking through your financial records to determine how much you paid overall for that month. Please note, however, that this may or may not stand up to an audit. Disclaimer: The contents of this paragraph are my own opinion and should not be relied on without consulting a professional tax advisor.

Won't my accountant take care of this for me?

Probably not. Because the cost of his/her time is likely more than the extra refund that you might get back by having him/her compute it, almost every CPA we've spoken to is recommending that his/her clients take the standard credit of $30-$60 even if they're entitled to much more. Phone Tax Refund Calculator© enables you to hand your accountant a completed Form 8913 with very little work on your part. All your accountant has to do is plug the bottom-line number into his/her tax software and attach your already-completed form (and interest calculations, if applicable) to your return.

How does the software work?

Since the computations are different for corporations and non-profits than for everyone else, I created 3 modules:

  1. Phone Tax Refund Calculator© for Corporations and Non-profits


  2. Phone Tax Refund Calculator© for Partnerships/Trusts/Estates and Business Individuals


  3. Phone Tax Refund Calculator© For Individuals Only ("Actual" Method). This is the same as the Partnership/Trusts/Estates version except that it only performs the "Actual" method calculation. The Business Estimation method has been removed, and the price is therefore much less. If you're buying this product for a partnership, trust or estate, and you know that you're going to use the Actual method, feel free to buy this module and save $20.


Simply enter the requested data from your phone bills (and your tax returns, if you use the Business Estimation Method), and Phone Tax Refund Calculator© will compute everything. Please note that as I am not a professional programmer, I did not know how to make Excel generate a filled-in Form 8913. However, Phone Tax Refund Calculator© DOES create a reasonable facsimile from which you can copy accurate information, box-by-box, onto a real Form 8913 (or enter into professional tax software) in just a few minutes. You can even download a blank Form 8913 from the IRS website directly from within the program.

The difference between Phone Tax Refund Calculator© and the built-in functionality of most professional tax software is that the major tax packages do not allow you to enter raw data from your phone bills. You must first total them up and then keypunch the info into the tax program. Phone Tax Refund Calculator©, on the other hand, allows you to simply enter raw data from each of your phone bills (local, long distance, wireless, etc.) without having to add them up yourself into nice neat quarterly groups and without having to figure out which column or box to put the numbers in. In fact, according to a recent article in The St. Louis Dispatch, TurboTax and TaxCut only offer the safe harbor refund of $30-$60. Neither program supports Form 8913. If you use either one, you need Phone Tax Refund Calculator©.

What are the features of each module?

Phone Tax Refund Calculator© For Non-business Individuals Only ("Actual" Method):

  1. Computes interest to filing date + 45 days, per IRS instructions. If filing date is 4/15/07, system uses IRS interest factors from instructions to Form 8913. If fling date is later, computation is based on the interest tables in IRB 2006-40 and IRB 2006-52, in accordance with IRS rules.


  2. Prints out detailed interest calc for each quarter for attachment to tax return


  3. Built-in safeguard against entering an early filing date


  4. Generates a Form 8913-equivalent. It's not suitable for filing, but you can easily transfer the numbers onto a real form, box-by-box.


  5. Will save you hours of wading through the IRB and calculating interest for each quarter.



Individuals who do not have any business income and spend less than about $50 per month on long distance and wireless combined do NOT need this program. At or below that spending level, I recommend the Safe Harbor refund of $30-$60. The extra refund that you might receive via Phone Tax Refund Calculator© may not be worth your time. And since I wrote the program for the purpose of helping people, it would be inappropriate for me to accept your payment if you most definitely don't need what I'm offering.

However, if you do spend a significant amount on LD and wireless each month, $30-$60 is way too small an amount to settle for. And Phone Tax Refund Calculator© will more than pay for itself (perhaps several times over).

(To skip past the features of our Business modules, Click Here)

Phone Tax Refund Calculator© for Corporations and Non-profits:

  1. Choice of "Business Estimation” Method (which allows you to estimate based only on April 2006 and September 2006 bills) or "Actual” Method. There's a separate spreadsheet template for each method.


  2. Generates a completed Business Estimation Method "Allowable Excise Tax Rate" worksheet from Step 2 of the IRS instructions


  3. Generates a completed Business Estimation Method Worksheet from step 3 of the IRS instructions


  4. Computes interest to filing date + 45 days using rate schedules in Internal Revenue Bulletin 2006-40 and 2006-52, in accordance with IRS instructions.


  5. For companies with more than 250 employees that use the Business Estimation Method, the system will also show an approximation of your refund if you were to use the Actual method (based on April/September data) and the difference between the 2 methods, including interest.


  6. For overpayments higher than $10,000 in any quarter, system will calculate one rate for the first $10,000 and the lower rate for the amount in excess of $10,000, in accordance with IRS rules.


  7. Prints out detailed interest calc for each quarter for attachment to tax return. Attaching interest calculations could help to prevent an audit.


  8. Built-in safeguard against entering an early filing date


  9. Generates a Form 8913-equivalent. It's not suitable for filing, but you can easily transfer the numbers onto a real form, box-by-box.


  10. Will save you hours of wading through the IRB and calculating interest for each quarter.


Phone Tax Refund Calculator© for Partnerships/Trusts/Estates and Business Individuals:

  1. Choice of "Business Estimation” Method or "Actual” Method (there's a separate spreadsheet template for each)


  2. Special worksheet for 1040 (individual) business filers to determine eligibility for the Business Estimation method (i.e. $25,000 income floor)


  3. Generates a completed Business Estimation Method "Allowable Excise Tax Rate" worksheet from Step 2 of the IRS instructions


  4. Generates a completed Business Estimation Method Worksheet from step 3 of the IRS instructions


  5. Computes interest to filing date + 45 days. If filing date is 4/15/07, system uses IRS interest factors from instructions to Form 8913. If fling date is later, computation is based on interest tables in IRB 2006-40 and 2006-52


  6. For companies with more than 250 employees that use the Business Estimation Method, the system will also show an approximation of your refund if you were to use the Actual method (based on April/September data) and the difference between the 2 methods, including interest.


  7. Prints out detailed interest calc for each quarter for attachment to tax return


  8. Built-in safeguard against entering an early filing date


  9. Generates a Form 8913-equivalent. It's not suitable for filing, but you can easily transfer the numbers onto a real form, box-by-box.


  10. Will save you hours of wading through the IRB and calculating interest for each quarter.



How Accurate Is Phone Tax Refund Calculator©?

I tested it against a major professional tax program (CCH Prosystem FX) that is used by hundreds of CPA firms. I entered a refund of $1,000 for each quarter in both programs. The interest calculations were within 1 dollar of each other in every quarter. So, while we don't guarantee complete accuracy (see refund policy below), Prosystem FX has confirmed that we're right on target.


What Else Do You Get With Phone Tax Refund Calculator©?

In addition to receiving the Phone Tax Refund Calculator© module(s) that you purchase, you'll gain access to our users-only online community for technical support and other issues.

You'll also receive free periodic updates to the software. As we add features, you'll be first in line to receive them.

What are the system requirements to use Phone Tax Refund Calculator©?

I programmed Phone Tax Refund Calculator© using Microsoft Excel 2003 on a Windows-based PC (and zipped it up in a self-extracting file using Winzip 11.0. Since the file is self-extracting, you do not need to install Winzip). Since there are no functions in the program that are unique to Excel 2003, I expect that it will work properly in earlier versions, as well. If you find that it does not, I will issue you a refund. Please download the sample templates to check for compatibility. If the samples work on your computer, so will the actual template, since the samples are exactly the same as the actual templates except that the phone bill data entry fields are locked.

Also, please set your screen resolution to at least 1024x768.

What is the Refund/Exchange Policy?

Due to the easy-to-copy nature of Phone Tax Refund Calculator©, it is sold "as is". If you discover a flaw in one or more of the templates, please post it on the support forum and I will issue a fix as soon as possible. Please note that even though we have examined every formula in the templates, we cannot be held liable for any penalties or interest due to miscalculations or if the IRS determines that 1 or more of our assumptions was incorrect. Accuracy of what you submit to the government is your responsibility. For the Individual-only template, I cannot issue a refund if you later discover that the safe harbor method produces a greater refund. As mentioned above, I will offer a full refund in the case of compatibility issues. I will also offer an exchange for LLC's/LLP's that accidentally purchase the wrong module (LLC's/LLP's should purchase the module for the type of tax return they file). Please email me for more details.

Please take this policy into account before purchasing Phone Tax Refund Calculator©.


What does Phone Tax Refund Calculator© cost?

Ordinarily, in our telecom consulting practice, for FET Refund Calculation projects, we charge either $250 per hour (with a 3-hour minimum) or 20% of the tax and interest that we recover for our client ($5,000 minimum). However, I want to help as many individuals, families and businesses as I can to get their maximum possible refund with Phone Tax Refund Calculator©. Unfortunately, since we’re a tiny company housed within a CPA firm, and the CPA firm has only 24 phone lines serving 50 people, telephone support is not feasible, especially during tax season. To reduce the load on their phones (and on their receptionist), I've set up an online community forum for tech support issues. Even though our phone number appears on this page, please do not call in with questions about Phone Tax Refund Calculator©. Instead, please post it in the support forum. I will answer as quickly as possible.

I've priced Phone Tax Refund Calculator© low enough that just about everyone can afford it:

Phone Tax Refund Calculator© for Corporations and Non-profits (single-user license) - Only $24.95.

Phone Tax Refund Calculator© for Partnerships/Trusts/Estates and Business Individuals (single-user license) - Only $24.95

Phone Tax Refund Calculator© For Individuals Only ("Actual" Method) for those who have most/all of their bills and don’t want to settle for $30-$60 (single-user license) – Only $4.95!

Professional Tax Preparer Package – All 3 modules with a license for 2 in-house users and for distribution to 100 clients – Only $99!

To order 5 or more user licenses, please email us and we will send you a discount code.

Multi-user license pricing is on the honor system. Phone Tax Refund Calculator© is easily copy-able, as usage of a spreadsheet template cannot be restricted to a fixed number of people. Therefore, if you have more than one person who will use it (i.e. if you're buying it for your CPA firm), please respect our copyright by purchasing the correct number of licenses.

For private-label licensing (i.e. banks, phone carriers and others that serve the consumer and business markets), please email me for special pricing.

Why is it priced so low?

While Phone Tax Refund Calculator© performs a valuable service and is worth much more than what we're charging for it, we understand that its useful life is very short. The consumer module will become obselete on October 15th, 2007, the final deadline for those who file on extension. Also, for you, the consumer, to feel comfortable purchasing it, the potential benefit has to be worth several times your "opportunity cost". If you net just an extra $25 - $30 by using Phone Tax Refund Calculator©, then the $4.95 price is well worth it. Even though our very first customer has already reported that his family netted an extra $250 vs. the $60 standard credit, we're going to keep the price at just $4.95.

Who is TBRC Cost Recovery, LLC?

TBRC Cost Recovery, LLC helps companies to recover money for errors on their phone bills and to save money going forward. We also help businesses that are shopping for new telephone service providers.

We are housed within the accounting firm of Shanholt Glassman Klein Kramer & Co., CPA's, P.C. and are part-owned by the firm's partners. Because of their ownership stake, we are obligated to adhere to the same ethical guidelines as a CPA firm.

For a billing error engagement, we require a minimum current monthly telecom spend of $2,000. Our fee is a percentage of the amount we recover from the past and the amount we save going forward for 2 years. After that, the savings are yours to keep 100%.

What other services does TBRC Cost Recovery, LLC offer?

We also offer quotes for carrier services. We represent over 30 different service providers of local, long distance, toll-free, Internet, audio/web conferencing, wireless, etc. Each quote is customized to your area code and prefix (e.g. 212-555-xxxx) when appropriate. Rather than spend your valuable time calling around to several carriers for pricing info (and getting data that limits you to an apple-to-oranges comparison), allow us to do the legwork. We'll provide you with a spreadsheet that shows pricing from at least 5 different carriers (sometimes as many as 13), in an easy-to-read and easy-to-compare format. We even include all the various surcharges that most carriers try to hide from you until you sign up.

Our minimum-size account for a customized quote is $500 per month or at least 1 T-1 circuit. There is no fee for this service.

Even though we cannot offer customized manual quotes for smaller accounts, we do offer great deals on many services. Please visit many of our service providers at www.TBRCservices.com. There is a built-in Best Rate Search Engine.

Do you offer an affiliate program for Phone Tax Refund Calculator©?

We no longer offer an affiliate program.

What if I have more questions about Phone Tax Refund Calculator©?

If you have any questions about Phone Tax Refund Calculator© that aren't covered here, please visit the support forum.
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