updated 4/14/2006 5:24:45 PM ET 2006-04-14T21:24:45

The Bush administration, grappling with adverse court rulings over a tax on some long-distance telephone service, is considering options including refunds.

Several federal courts have sided with companies that argue the three percent tax on local, long-distance and wireless calls does not apply to some current long-distance billing plans.

The original law applied the tax to calls billed according to the distance and length of a call, but many modern calling plans no longer apply different rates according to the distance of long-distance calls.

Those court rulings have driven discussions among federal agencies to come up with a solution. The Congressional Budget Office has said that the government could owe three years of refunds to businesses and individuals who request them.

"They are doing their best. Treasury, the IRS and the Justice Department are working together to come up with an eventual outcome," Sean Kevelighan, a spokesman for the Treasury Department, said Friday.

A range of options are being considered, including the possibility of a refund to consumers and businesses, he said.

The Wall Street Journal, in Friday's editions, reported that the government is working on a plan to stop collecting the levy and refund billions of dollars to consumers and businesses.

Kevelighan said he didn't have a timetable for when the agencies might arrive at a decision on the matter. He also wouldn't say how much is collected each year from the tax.

The tax dates back to 1898, when telephones were a luxury and lawmakers needed money to help pay for the Spanish-American War.

The government can expect to collect $52 billion over the coming decade from all telephone excise taxes, according to the budget office.

"We understand it is an important issue and that is why we are making sure to be very strategic and thorough in our planning," Kevelighan said.

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