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Cingular gets town utility tax credit

The Town of Coupeville has settled a lawsuit with New Cingular Wireless PCS LLC.

The town is one of more than 100 municipalities in Washington to have been sued by the mobile Internet service provider. The settlement provides Cingular Wireless, formerly AT&T Mobility, with a credit of about $5,300 against its future local utility taxes.

This amount is 90 percent of the last three years of the claim. The initial claim of over $6,000 had been submitted in November 2010 – the total amount of tax money the company had paid to the town.

“This is a very complicated litigation involving many cities (more than 100) and many potential defenses,” Coupeville’s attorney, Thom Graafstra, wrote in advising the town. “None of the defenses have been legally tested and the outcome of the litigation is uncertain at this time.”

In addition to the uncertainty, the attorney advised the town to settle because the town’s defense costs would more than likely have exceeded the settlement amount.

The settlement also releases the town from any further liability with regard to the claim.

According to Graafstra, the settlement amount is consistent with that paid by other small cities and towns.

Settlement was also advised by Graafstra because the town does not have insurance for this claim and received a denial of coverage from its insurer.

“(Settlement) is the most cost effective way to handle this,” Coupeville Mayor Nancy Conard said.

The lawsuits against Coupeville and the other towns followed a class action lawsuit that had been brought against AT&T Mobility by mobile Internet subscribers for collecting taxes and fees on data usage. The lawsuit alleged that the practice of charging customers taxes and fees on mobile access violated the Internet Tax Freedom Act.

Whether or not this practice in fact violates this federal law or other state laws was never determined.

No opinion was rendered by the court as to the merits of the claims or the defenses provided by AT&T Mobility.

By settling the class action, both sides agreed that AT&T Mobility was not admitting liability or that it had done anything wrong. Instead, a settlement allowed for the avoidance of expensive and time-consuming litigation.

The settlement class included anyone who had paid taxes, fees or surcharges to AT&T Mobility for data plans using laptop connect cards, pay-per-use data services, and smartphone data plans including those for the Blackberry and iPhone between Nov. 1, 2005 through Sept. 7, 2010.

 

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