A wireless telecommunications division of AT&T will receive thousands of dollars in reimbursements from the city of Battle Ground, part of an ongoing lawsuit alleging that cities throughout Washington improperly collected utility taxes from 2005 to 2010.
In Battle Ground’s case, the agreement with New Cingular Wireless, a division of AT&T that provides mobile multimedia services, will cost the city $22,113.44. The city will refund New Cingular directly from the monthly tax rate the company pays, roughly $8,000, starting next month, Battle Ground city attorney Brian Wolfe said.
The city considers the settlement a more “cost effective” option than pursuing lengthy litigation, Wolfe said, especially after the company originally asked the city to refund $35,851.65 prior to its filing the lawsuit in April 2012.
Battle Ground isn’t alone in dealing with the lawsuit, borne out of a class action claim filed in U.S. District Court of Northern Illinois in 2010. The suit says AT&T Mobility and its affiliates, including New Cingular, were improperly taxed and passed those costs on to consumers.
In Washington, New Cingular Wireless is suing cities in an attempt to collect that tax revenue. The company has attributed the overcharges to its own coding error. Because of the error, states and cities ended up charging New Cingular — and, by extension, their customers — not just for telephone service but also Internet access, a violation of state and federal laws.
In Clark County, Battle Ground’s settlement isn’t expected to affect an ongoing legal dispute between Vancouver and New Cingular.
The company sued the city of Vancouver in Clark County Superior Court in July, seeking $521,569.88 in tax refunds.
Brent Boger, the city attorney leading Vancouver’s defense of the lawsuit, said small cities have more to lose in pursuing a court battle, even if they believe they have a case.
“A lot of smaller cities have been settling this,” Boger said. “They’re doing it because it’s not worth incurring the defense costs.”
Vancouver plans to continue fighting the lawsuit, he said, because of
the large sum of money at stake. He intends to file a response to the company’s lawsuit today.
The response argues that Vancouver is not liable to repay the company because its utility tax ordinance, which permits taxing data plans, is allowed under a grandfather clause, Boger said.
Company officials have said the settlement will cover customers who paid extra fees to AT&T mobility for Internet access through their smartphone plans, pay-per-use data services and laptop connect cards.