Schumer Calls on IRS To Refund 'Illegally Gotten' 3% Cell Phone Tax

Senator Schumer has finally found a tax he opposes - the 3% federal excise tax tacked onto every cell phone bill in America.

Two weeks ago, a federal appeals court in Washington, D.C., ruled the tax illegal because it applies to calls that are measured in distance. Cell phone conversations are measured in time. Two other federal appeals courts with jurisdiction over seven states - Kentucky, Michigan, Ohio, Tennessee, Alabama, Florida, and Georgia - also have voided the tax.

Despite the three consistent rulings, the Internal Revenue Service continues to collect the tax, which costs an average American cell phone customer $50 a year. Mr. Schumer yesterday sent a letter to the IRS commissioner, Mark Everson, urging him to stop collecting the tax and to refund Americans for the past three years of fees.

A national refund would cost the IRS about $9 billion, Mr. Schumer said, with New York City cell phone customers receiving about $275 million of that total.

"The IRS asks all of us not to violate the law. Now we're asking the same," Mr. Schumer said yesterday during a news conference at his Midtown office. "Don't violate the law. Don't collect a tax that has been declared null and void, and return the money you've illegally gotten from cell phone users in New York and across the nation to them immediately."

The tax in question was imposed in 1898 to help pay for the Spanish American war. The tax was repealed in 1902 but was reintroduced during World War I and was used to fund later wars including World War II, the Korean War, and the Vietnam War. Some Americans are currently protesting the war in Iraq by not paying the 3% tax.

While Mr. Schumer didn't go so far as to recommend that people stop paying their phone bills in full, and never brought up the fact that the tax was initially created to finance war, he said the IRS should immediately stop tacking the excise tax onto cell phone bills.

"Cell phone users in New York City already suffer enough - interrupted calls, high rates," he said. "To pay an additional tax, a hidden tax, on your cell phone really makes no sense."

A spokesman for CTIA-The Wireless Association, Joseph Farren, said mobile phone users are taxed at very high rates, and said they deserve a break.

"The average cell phone user in America pays 17% of his or her bill in taxes and fees. That is an outrageous amount of tax for anyone to pay," he said. "Obviously, this would be a much needed tax break for wireless users."

He said that for a while, lawmakers tacked extra taxes onto cell phone bills instead of boosting income taxes or sales taxes to raise revenue.

He said cell phone users are "fed up" and are fighting back.

"They're very angry about it," he said. "Consistently, we hear from our customers that this is one of the things that needs to change about wireless - this excessive tax rate."

Mr. Schumer said he would give the IRS a couple of months before pursuing legislation to force it to stop collecting the tax.

The IRS did not respond to a request for comment yesterday.