By DAVID LAZARUS
San Francisco Chronicle
December 08, 2005
So-called tax resisters risk the wrath of the Internal Revenue Service. Yet that hasn't stopped them from withholding payment of the monthly federal excise tax on their phone bills, proceeds from which are used in part to fund U.S. military adventures abroad.
Ruth Benn, who runs the National War Tax Resistance Coordinating Committee in New York, said it's impossible to know for sure how many people are participating in the grass-roots movement.
But she said communications received by her organization and discussions with other protest coordinators suggest that at least 10,000 people nationwide are withholding federal excise tax payments because of the war.
"This is civil disobedience, and you can be at risk," the 53-year-old Benn said. "But the government listens when it involves money. This is a good way to get their attention."
As it turns out, most phone companies aren't shedding any tears over missed federal excise tax payments. It's not that they sympathize with protesters' feelings about the war. They just don't like the tax.
"We think it's antiquated and has no place in a modern economy," said Joe Farren, a spokesman for telecom industry group CTIA (formerly the Cellular Telecommunications and Internet Association, but now just an acronym).
"We think this tax is outrageous and shouldn't be assessed," he said.
The federal excise tax on phone usage dates back to 1898. It was adopted under the War Revenue Act as a temporary levy to help fund the Spanish-American War. The war ended in October of that year. The tax was repealed in 1902 but didn't stay gone for long.
It was reintroduced during World War I and was subsequently used to fund the nation's military activities during World War II, the Korean War and the Vietnam War.
The tax was given permanent status in 1990 and now stands at 3 percent of a consumer's monthly phone bill. It raises about $6 billion a year for general federal expenditures, including military spending.
Aspects of the federal excise tax have been challenged in recent court decisions. Nevertheless, the IRS still insists that it be paid in full.
Tax resisters like Benn advise would-be protesters to include a note with their phone payments explaining why they're not paying the tax.
The note will make clear to the phone company what's happening and, in most cases, deter the carrier from cutting off one's service. What happens next, though, varies from company to company.
Some may repeatedly insist that money is due. Others will make it easy for the protester.
"We believe this is an illegal tax, and we would support any legislation that repeals it," said John Britton, a spokesman for AT&T.
He said AT&T will routinely eliminate federal excise taxes from customers' monthly bills if asked to do so in writing.
"We'll go into our system and make an adjustment," Britton said. "But we will have to report you to the government."
For its part, Cingular Wireless sends a letter to tax-resisting customers agreeing that the federal excise tax is "antiquated and discriminatory" and that it has "has far outlived its purpose."
As such, Cingular will also adjust customers' monthly bills to write off the federal excise tax on a regular basis. (MCI and Verizon Wireless have similar policies.)
"Please be aware, however," Cingular's letter warns, "that as required by law, Cingular Wireless will report your nonpayment, and provide your name, address, amount of tax written off to the IRS."
Phone companies are legally obligated to try to collect the federal excise tax. But they have no enforcement power. It's the IRS' job to crack down on tax scofflaws.
Because the amount of federal excise tax money withheld per household is so small, it's highly unusual nowadays for the IRS to go after people for not paying.
"It's just not worth it for them to pursue things like this, where it can cost more to get the money than the amount they collect," said Susan Quinlan, organizer of Northern California War Tax Resistance, a Berkeley group.
Quinlan, 47, said she's been withholding her federal excise tax for about 20 years.
"I've had phone companies pester me in terms of paperwork," she said. "Never the IRS."
Jesse Weller, an IRS spokesman, said that failure to pay the federal excise tax on phone bills is against the law.
"There is no law that permits a person to refuse to file a federal tax return or pay a federal tax based on what the government spends on programs or policies they disagree with," he said.
"This includes failure to pay the telephone excise tax based on moral, ethical or religious opposition to government spending for weapons programs or military operations," Weller stressed.
Moreover, he insisted that the IRS is determined to identify all those who evade taxes "based on their opposition to government policies or programs."
Weller said such people may be liable for all unpaid taxes, as well as interest and penalty fees.
Benn, at the National War Tax Resistance Coordinating Committee, said she hasn't paid her federal excise tax since 1980, and hasn't heard a word in all that time from the IRS.
"It's a pretty small thing," she said of the amount she denies the government each month. "It won't end the war all by itself. But perhaps it will help."
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