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Democrat Senator Calls for Repeal of Federal Cell Phone Tax

2 min readBy: Andrew Chamberlain

Despite losing a series of legal battles in recent years, the Internal Revenue Service has continued to collect the federal telephone excise tax on cellular phone services. In recent months, lawmakers in both major parties have begun pushing the IRS to abandon the practice. The latest to join the chorus is Sen. Charles Schumer (D – N.Y.), as reported by Newsday:

Sen. Charles Schumer blasted the Internal Revenue Service Wednesday for continuing to collect taxes on cell phone bills despite several court judgments against them.

Schumer, D-N.Y., urged the IRS to drop the federal excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. , which takes about 3 percent of a monthly cell phone bill.

Several federal judges around the country have decided the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. should not apply to cell phones, but the issue is still before appeals courts, with the federal appeals bench in New York City due to hear arguments in the case March 22.

If higher courts agree and decide the IRS not only needs to stop collecting the tax but offer refunds for the past three years, that could mean more than $250 million for New York cell phone users, Schumer said.

“That would end up being about $50 per person,” said the senator, though he cautioned that even if the IRS acceded to give up the tax, they may still try to require extensive documentation for everyday cell users to get their refunds.

Schumer is pushing legislation in Congress to force the end of the cell phone tax and make it easier for customers to get refunds. The IRS has continued to fight in the courts to keep the tax alive.

According to this table, New York has an effective local, state and federal telecommunications tax rate of 21.3 percent, 17th highest in the nation. However, just three percent of that is accounted for by the federal telephone excise tax. The majority of the tax burden borne by cell phone users is due to a patchwork of state and local taxes and fees.

Last year legislation was introduced in Congress to repeal the federal telephone tax. Click here for our previous post on the bill.