Hang Up on War: Get a Tax Refund

If you are upset that Congress won't defund the war in Iraq, there's something you can do: Stop paying a tax. Legally.

The Internal Revenue Service is giving a rebate this year on a telephone war tax. This is one of those line items at the bottom of your phone bill. The tax was instituted in 1898 to help the United States pay for the Spanish-American War. Individuals and businesses have one chance to obtain a refund on this telephone war tax, by asking for it in their 2006 income tax returns.

Remarkably, the Internal Revenue Service has made it easy to request the refund, yet IRS Commissioner Mark Everson says that many taxpayers are overlooking it. Obtaining the refund is easy. But first, a little history.

The Spanish-American War lasted from April to August of 1898 and was predicated on a U.S. government demand that Spain abandon its colony in Cuba, which the U.S. subsequently occupied. By the end of 1898, the United States had also taken over the Philippines, Guam and Puerto Rico.

The war was also used as an official pretext to take over Hawaii. The Senate debated over the annexation in secret, some arguing for total annexation, others for just Pearl Harbor. Sen. Richard Pettigrew of South Dakota derided the annexation plan as money "thrown away in the interest of a few sugar planters and adventurers in Hawaii." Military bases and raw materials -- sound familiar?

The telephone tax was instituted as part of the War Revenue Bill, which expanded the government's ability to collect taxes, ostensibly to pay for the war. As with the myriad controversial "pork" items added to the recent Iraq war funding authorization, the 1898 bill was the subject of scores of amendments that benefited big business. These included tax breaks for powerful industries like the insurance companies and tobacco dealers.

The telephone tax of 1 cent per call targeted the wealthy, who were generally the only ones who had telephone access in 1898. After the war, the tax was eventually raised to 3 percent. Since the Vietnam War, it has been the target of war tax resisters, people who refuse to pay taxes because they do not want to fund war.

Tax resistance has a long history. Henry David Thoreau promoted it in his essay "Civil Disobedience" to fight slavery: "If a thousand men were not to pay their tax bills this year, that would not be a violent and bloody measure, as it would be to pay them, and enable the State to commit violence and shed innocent blood."

The IRS has vigorously targeted full-fledged tax resisters -- ranging from those refusing to pay the Pentagon's percentage of their taxes, to those who outright refuse to pay anything to the government -- making an example of them by garnishing wages, sending them to prison for tax evasion and confiscating their homes.

Tax resisters figured out that they could protest the telephone tax simply by writing their checks to the phone company, withholding the amount of the tax. The IRS deemed the collection of the tax too expensive, relative to the small amount of the tax itself.

According to the National War Tax Resistance Coordinating Committee, early collection efforts by the IRS included the auctioning of Jim Glock's bicycle for $22 in 1973 and of George and Lillian Willoughby's VW Bug in 1971 for $123 (in 2004, Lillian, at 89, with the support of her husband, George, 94, was jailed for protesting the Iraq war).

Court losses convinced the IRS to dump the telephone war tax in 2006 and to offer the retroactive rebate for phone taxes paid between March 1, 2003, and July 31, 2006. Typical refunds will be between $30 and $60. Ironically, while the IRS has dropped the tax on long-distance and "bundled" services, like high-speed Internet, the tax remains for older, standard local phone services and rental of equipment that enables the disabled to use phones.