Nevadans Are Missing Out on Phone Tax Refund

Early indications from 2006 tax filings is that almost a third of Nevadans are failing to apply for a phone tax refund that could cut their income taxes by up to $60. The Las Vegas Review-Journal reports:

The IRS conducted a survey over a three-week period indicating that 31.6 percent, or 79,000 of the 248,000 tax returns already filed by Nevadans, did not request a credit for federal telephone taxes. IRS spokesman Raphael Tulino said the 79,000 who failed to seek a credit, in effect, walked away from $2.3 million in credits or cash.

There are two important lessons here.

First, and most important, is that an effective outreach program is key in getting people to apply for tax breaks. This is a vital thing for Nevada lawmakers to know as they confront questions of tax fairness in the future, because even the best-targeted tax break for low-income families can't do its job unless people know about.

Second, it's easy for a tiny sapling like the phone tax refund to get lost among the tall trees of the Internal Revenue Code. There are an awful lot of tax breaks for special groups in the Code (for which we should blame Congress and the Administration, not the IRS), and a temporary credit that caps out at $60 for most people will hardly be written in neon lights for most of us.

The article doesn't say whether low-income families are disproportionately likely to be part of the 30 percent of Nevadans who are missing the boat on this, but it seems intuitively likely that this is true. And this is a tax fairness problem that both state and federal officials should be deeply concerned with.