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Wednesday, January 12, 2011

AT&T Seeks Tax Refund from City

• Claim Rejected


The Malibu City Council, at its meeting this week, turned down a claim by AT&T Mobility seeking a $99,920 refund of the city’s utility user tax.
According to City Attorney Christi Hogin, who recommended the request be denied, the claim which was received in November, asserts that AT&T Mobility improperly applied the utility users tax to its mobile data services for smart phones, BlackBerry and laptops in violation of the federal Internet Tax Freedom Act.
In a memo to council members, Hogin indicated similar claims were filed with taxing jurisdictions nationwide.
Hogin wrote the claim should be denied for several reasons.
However, local activist Ryan Embree said the city should honor the claim and give back the money since it is mostly Malibu users.
“I think we owe these people their money back. We are screwing ourselves. We can refund it back to Malibu residents,” he urged.
Hogin replied that she was sticking to her legal opinion and if the council wanted to talk about it, they should do so in a closed session.
Council members said nothing and then Councilmember Pamela Conley Ulich moved the recommendation and the council unanimously voted to reject the claim.
In her staff report, Hogin cited numerous reasons why the claim should be rejected. One of which is that Malibu municipal law requires that all claims made on behalf of a class or group must be verified by each member of the class.
“Since the claim is being made on behalf of a class pursuant to a settlement agreement between AT&T Mobility and numerous class action plaintiffs, the claim is not verified by each member of the class and therefore fails to comply with the [Malibu municipal code] claim presentation requirements,” Hogin opined.
The city attorney cited another reason for rejection. “Portions of the refund claim older than one year must also be returned as untimely.”
Hogin also noted that where taxable and non-taxable services are combined on a customer’s bill, the entire amount is subject to the tax under the city’s code unless the service supplier identifies the portions of the bill which are not taxable.
“As the service supplier, AT&T bears the burden of proving the proper appointment of taxable and non-taxable charges. The city should not be liable for AT&T’s breach of its duties in collection and remittance of the tax,” the city attorney concluded.

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