108-year-old excise tax is now history Verizon Communications Inc. has stopped collecting a 108-year-old U.S. telephone excise tax after the U.S. Internal Revenue Service (IRS) decided in May to stop fighting to keep the tax.Verizon on Tuesday stopped collecting the 3 percent federal excise tax on long-distance wireline telephone services. The company stopped collecting the tax on wireless services June 1.U.S. telephone customers will be able to receive a refund or credit on federal excise taxes paid over the last three years on their 2006 federal tax return. The details of the refund are being worked out. Large telecom carriers and some U.S. lawmakers have targeted the federal excise tax for several months. In May 2005, the U.S. Court of Appeals for the 11th Circuit ruled that long-distance telephone services are not subject to the excise tax, which Congress approved in 1898 as a way to help pay for the Spanish-American War. At the time it was a luxury tax on wealthy U.S. residents who owned telephones.A portion of the tax applying to local telephone service is still in effect, but some U.S. lawmakers are pushing for legislation that would end that as well.When the IRS in late May announced it would stop fighting a court battle to collect the excise tax, several Republican lawmakers praised its action. “President Ronald Reagan often said, ‘The nearest thing to eternal life we will ever see on this earth is a government program,'” Senator John Sununu, a New Hampshire Republican, said then. “Certainly, nearly 108 years after the end of the Spanish-American War, we have tested the upper limits of these words. The ruling to end collection of the long distance portion of this tax is a victory for telephone consumers and other users of communications networks.” SecurityTechnology IndustryCareers