Call It the Teddy Roosevelt Refund

Individual taxpayers will be able to claim a refund of up to $60 on their 2006 federal returns as the government attempts to give back $8 billion in long-distance telephone taxes that courts have ruled should not have been collected.

The Internal Revenue Service yesterday announced refunds that vary by how many dependents a tax filer claims. In May, after losing a series of federal court cases, the IRS said it would no longer collect the 3 percent tax -- first imposed in 1898 to fund the Spanish-American War -- and ordered telephone companies to stop charging it by Aug. 1.

Individuals will be eligible for a refund of the long-distance tax billed for any phone service -- cell, fax, computer or land-line -- in the 41-month period from Feb. 28, 2003, through July 31, 2006. Taxpayers can claim a maximum refund of $60 with no questions asked, meaning they don't have to produce copies of phone bills to get money back.

For the 2006 return, a person filing a return with one exemption can claim $30; two exemptions, $40; three exemptions, $50; and four or more exemptions, $60. The agency cited this example: A married couple filing a joint return with two dependent children, for a total of four exemptions, would be eligible for the maximum amount of $60. A line for the refund will appear in the 2006 federal tax return.

The IRS developed the sliding scale for individuals based on its estimates of what a typical family might have paid in federal excise tax on long-distance service. A household with a long-distance bill of about $50 a month would have paid $18 a year, or about $61.50 for the 41-month period.

"Nothing is precise," said David Williams, the IRS executive in charge of the refund project. "It's certainly possible some may get more than they paid, some less, but we believe that this is fair and reasonable and the least burdensome for most taxpayers."

Taxpayers who think they deserve a larger refund can claim it but will have to produce old telephone bills or other records of payment if audited. IRS officials think most people will opt for the no-questions-asked alternative, which could result in refunds larger than the actual tax paid by as much as $2 billion.

The IRS estimates it also owes an additional $5 billion in phone-tax refunds to businesses, but officials are trying to develop a simplified refund scale similar to what is being offered to individuals. Without a comparably easy method, officials say, many companies will have to pore through volumes of phone bills, a burden that for many firms, especially small ones, might outweigh the benefit of a refund.

The dispute over the tax began several years ago when businesses realized that the law imposing the surcharge was outdated. The law applied the tax on long-distance charges based on both how long a person talked and how far away the individual was on the other end of the line. In recent years, telephone companies have moved away from charging for calls based on distance and instead price long-distance rates on minutes alone. That, opponents of the tax said, meant the tax was invalid.

The agency has not announced when it will stop honoring requests for refunds, but officials said the deadline probably will extend beyond that for filing 2006 tax returns.