Federal Court Strikes Down Excise Tax.

In Office Max, Inc. v. United States, the Federal District Court in Ohio ruled that the IRS may only collect the federal excise tax for long-distance telephone service on charges that vary by the distance of the calling parties and by the duration of each transmission. The IRS challenged that the Internal Revenue Code defined toll telephone service as containing a charge that varied with the duration of the call, or the distance between the parties, or both. Because most long-distance service providers do not incorporate the distance of the call into the final charge, the ruling finds the IRS wrongly collected the federal excise tax. However, less than a month before, a similar lawsuit filed by American Bankers Insurance Group (ABIG) in a separate Federal District Court resulted in favor of the IRS. For our previous news item, click here. (Office Max, Inc. v. United States No. 04-4009)

Posted on March 15, 2006