Everyone has at some point heard a complaint about how the only people who benefit from class actions are the attorneys.  With little more than a month before your 2006 federal income tax return is due, it is only appropriate that this myth is the subject of this article.

While it is true that the class action device has been abused, class actions have served both as a useful deterrent to widespread malfeasance, and as a convenient vehicle for providing restitution to those who have been injured, but not to the point that individual litigation is warranted.  The one-time tax credit that is available on an individual's 2006 federal income tax return is proof that the class action device works.  The standard credit is between $30 and $60, unless the filer gathers up their phone bills for the period of February 28, 2003 through July 31, 2006, and provides the IRS with the exact amount that the individual paid in long distance excise taxes.  For more information regarding this one-time credit, the Internal Revenue Service has established a web page explaining how to collect the credit.

So next time someone tells you that class actions do not benefit the public, remind them of the tax credit they received on their 2006 federal tax return, and the fact that the 3% tax is no longer collected.