"The government owes you money."
Better words you'll never hear at tax time.
But this year it's true for 140 million Americans and most of them don't even know it.
The refund almost certainly applies to anyone who reads this article, even. If you have a telephone service plan, you should be getting at least $30 to $60 back, and a good deal more if you run a business or nonprofit organization.
The money is part of the Telephone Excise Tax Refund, a one-time payment available on your 2006 federal income tax return. The tax break is designed to refund long-distance telephone taxes the federal government collected between March 2003 and August 2006. The government lost a two-year court battle to keep the money it collected under an excise tax law that dates back to the Spanish-American War.
But here's the catch: You have to request the refund. Assuming, of course, that you know about it.
And that's a problem, says Jon Gorham, the 59-year-old co-founder of Refunds for Good, a Web site created to help taxpayers direct their mini-windfalls to one of three socially conscious nonprofit organizations (see the list below).
"This one-time 'war tax' refund is evaporating with very little media attention," Gorham says. "We are doing public service education work that the U.S. government has made a feeble attempt at doing."
By the way, it's not too late to claim the refund, even if you have already filed your return. (See below.)
Only 30 percent claiming refund
Search the Internet for information about the Telephone Excise Tax Refund and you will find an article on the IRS Website and several other sites, most of which link to Refunds for Good, the company founded by Gorham and his business partner Michael Swartz.
If you think the government has reason not to want to spread the word about the refund, you're right. Every unclaimed refund dollar goes back into the U.S. Treasury's general fund. And with an estimated $20 billion at stake, that's a lot of money to come up with elsewhere.
There's evidence that people aren't getting the message. On March 27, the IRS reported that only 30 percent of Maryland taxpayers claimed the refund. And when Gorham and Swartz randomly interviewed 40 people in two Connecticut cities, not one of them had heard of the refund.
Three charities highlighted on Website
The Refunds for Good Website is impressive. Actors and entertainers Larry Hagman, Martin Sheen, Ed Begley Jr. and Nate Corddry (from the "Daily Show") alternate on the site in videos to explain the tax break and introduce the three charities.
Multimedia slideshows walk viewers through the history of the tax, show the steps for filing for the refund, highlight the three charities, and, finally, provide a secure means of sending a donation to the group you select.
Those groups are:
Solar Electric Light Fund brings solar power and modern communications to rural villages in the developing world for enhancements in health, education, and economic well-being.
Physicians for Social Responsibility is the medical and public health voice for policies to stop nuclear war and proliferation and to slow, stop and reverse global warming and toxic degradation of the environment.
PeaceJam Foundation works with Nobel Peace Laureates from around the globe to nurture a new generation of young leaders committed to positive change in themselves and the world through peace-making service projects in their local communities.
But, to date, the response has not been overwhelming, and Gorham has several thoughts as to why: the late launch date for the site, the limited amount of media coverage, and people's fear of using a credit card on a site they are unfamiliar with, even though it is secure.
New focus: 'Extend or Amend'
Only days to go before Income Tax Day, April 17, consumer advocate Ralph Nader has taken up the effort to get Congress to "extend or amend" the tax refund bill to give more time for people to find out about it and file for their refunds. Nader's organization is referring people to Refunds for Good for information.
There is still time to claim the refund. All the tax forms you need can be downloaded from the site, and if you've already filed your tax returns you can download and complete an amended tax return using Form 1040X.
Gorham and Swartz will refocus their Web site after April 17, when individuals have filed their tax returns, to target businesses and nonprofit organizations. Companies in the $1 million to $200 million could save tens and hundreds of thousands of dollars, he said.
Meanwhile, the social entrepreneurs have not seen any return on their $250,000 startup costs and their combined 1.5 years of labor on the site. They won't receive a penny until each nonprofit gets $500,000 in donations. At that point a formula would kick in and they would receive a fee for every donation up to a maximum of 10 percent of the money the groups take in. The fee arrangement complies with the Association of Fundraising
Professionals' (Code of Ethical Principles.)
Gorham and Swartz are convinced more people will donate when they know more about it.
"Since most individuals and businesses have not been expecting this refund, the refunds represent 'found' money for American taxpayers," Swartz says. Without cutting into personal budgets, American can donate to these worthwhile causes.
