The Internal Revenue Service is dialing up the stakes on the telephone excise tax refund.

The IRS said last week that it raided tax preparation businesses in several cities nationwide, including Dallas, that were suspected of preparing returns for clients requesting “egregious” refunds.

This tells us two things: First of all, any time the government says it’s giving away money, people go crazy.

Second, a tiny percentage of tax preparers are unscrupulous people who will make wild promises about refunds just to get your business.

This may be a good time to review the rules behind the refund. I’ve gotten several calls from readers with questions.

The excise tax was established in 1898 as a luxury tax on wealthy Americans who owned telephones. It was levied to pay for the Spanish-American War that year.

Federal courts have ruled that the tax doesn’t apply to long-distance service as it’s billed today. So the government agreed to stop collecting the tax on service billed after July 2006 and authorized refunds of the taxes billed during the previous 41 months.

Let’s be clear on a few things:

The refunds can be claimed on your federal income tax returns. Don’t ask your phone company for the refund.

The government is refunding the long-distance phone excise tax. The federal excise tax continues to apply to local-only phone service. The refund covers the 3-percent tax paid on long-distance service billed after Feb. 28, 2003, and before Aug. 1, 2006. That includes service over land line, cell phone, voice-over-Internet protocol and fax, as well as bundled services, in which local and long distance are not differentiated.

You can’t ask for a refund of your whole phone bill! The IRS said that’s apparently what some people have been trying to do, either maliciously or ignorantly.

Likewise, various state and local taxes and fees paid by telephone customers aren’t affected and are not eligible for the refund.

This is not a tax deduction; it’s a tax refund, so you get money back even if you don’t itemize your deductions — and even if you don’t have to pay any taxes. As long as you had phone service during the period mentioned, you can file a return and get a refund.

So how do you claim the refund?

The easiest option is to file for the standard refund amount established by the Internal Revenue Service.

The standard amount is based on the number of personal exemptions you claim.

It’s $30 for one exemption, $40 for two, $50 for three and $60 for four or more.

The IRS says it calculated the amounts on actual telephone usage data of families.

The advantage of claiming the standard amount is that you only have to fill out one line on your return — line 71 on the 1040 form — and you don’t need to present proof to the IRS.

The other option is to get your old phone bills, add up the taxes you’ve paid and see if the total is more than the standard refund.

If you choose this method, you have to get your old phone bills so you can prove how much you paid in excise taxes. You also have to fill out Form 8913, Credit for Federal Telephone Excise Tax Paid, and attach it to your tax return.

If you haven’t kept your phone bills back to 2003, there’s still hope. Some telephone companies are letting customers look up their old bills online for free.

If you don’t use the Internet, you’re not so lucky. Phone companies’ policies vary widely as to what they charge to mail you back copies of bills. Call the customer service number on your bill for fee information.

When you look at your old bills, the excise tax will be listed as “Federal Tax” or “Federal Excise Tax.” Add up the taxes for the time period specified, and claim that amount as your refund.

Most taxpayers are taking the standard amount, said Clay Sanford, an IRS spokesman in Dallas. Considering the crackdown, it’s the wise thing to do if you can’t get all your phone bills.

Pamela Yip is a personal finance writer for The Dallas Morning News and can be e-mailed at pyip@dallasnews.com.