N.J. Public Advocate Urges Consumers to Seek Energy Efficiency Tax Credit and Telephone Refund

Newark, N.J.—New Jersey Public Advocate Ronald K. Chen today urged consumers to take advantage of limited-time chances to claim special tax refunds this year if they have bought energy-smart products or made energy conservation repairs to their home. In addition, consumers may also be eligible for a one-time refund of taxes paid on long distance calls.

“I am urging New Jersey citizens to take advantage of the current tax law to find credit and deductions that may help reduce taxpayers’ tax liability. Often many people miss out on key tax credits and refunds, unfortunately sometimes the people who need the money the most are not aware of these opportunities,” stated Public Advocate Chen.

How the Energy Tax Credit Works

Because of federal legislation that went into effect on January 1, 2006, consumers who purchased energy efficient products during 2006-2007 are entitled to tax credits, which are different from a tax deduction and are potentially more beneficial. Tax deductions are subtracted from income before the total tax liability is computed, while a tax credit is subtracted directly from the total tax liability.

Some examples of energy tax incentives offered are:

• Tax credits for residential solar photovoltaic and solar hot water heating systems
• Tax credits for highly efficient new homes
• Tax credits for residential fuel cell systems
• Tax credits up to a maximum of $500 for making energy efficient improvements to existing homes (Improvements must be made to your primary residence, which must be located in the United States. The home cannot be a second (vacation) home or rental property. Consumers can select a number of improvements from various categories but credits for some items are limited and the total tax credit you can receive is $500. Improvements must be made between 2006 and 2007.
• Energy efficient exterior doors, windows, and skylights
• Insulation designed to reduce heat loss or gain
• Metal roofs with “Energy Star” heat-reducing coatings

For more information on energy tax credits, consult with a tax expert. You can also find information at: www.irs.gov/newsroom/article/0,,id=154657,00.html

In addition, Rate Counsel Seema M. Singh said all consumers should actively pursue refunds given for conservation and for past taxes charged due to long distance calls.

“I am urging all consumers to take credit for their energy conservation efforts, and receive a long sought after refund of taxes previously charged on long distance telephone service,” Singh said.

How the Long Distance Telephone Service Tax Refund Works

Consumers may be eligible to recoup taxes paid on long distance telephone service. There is a "federal excise tax refund credit" that can be claimed on the 1040 tax form. For consumers who no longer file a tax return, but who had their own land phone in their home and have been paying a phone bill over the years, the IRS offers a special form, 1040EZ-T.

This chance for a tax credit is available because the federal excise tax had been charged on phone bills for years. The tax was assessed on toll calls based on how far the call was being made and how much time a person talked on that call. Once telephone companies began offering flat fee phone service, the excise tax was disputed on the basis that flat fee/rate phone service has nothing to do with the distance and the length of the phone call. Telephone companies were advised to stop assessing the federal excise tax as of Aug 30, 2006. The standard refund (without telephone records) ranges between $30-$60, depending on exemptions.

For more information on this tax credit, consult with a tax expert and go to: http://www.irs.gov/newsroom/article/0,,id=161506,00.html

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The Division of Rate Counsel is a division within the Department of the Public Advocate and represents the interests of consumers of electric, natural gas, water/sewer telecommunications, cable TV service and insurance (residential, small business, commercial and industrial customers). Additional information on this and other utility matters can be found at the Division’s website at http://www.rpa.state.nj.us. The Department of the Public Advocate website is http://www.state.nj.us/publicadvocate.

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