AT&T may face $1B settlement for phone tax

Lawyers at Kansas law firm, Bartimus Frickleton Robertson & Gorny PC, negotiated a class-action settlement with a division of AT&T that could be worth nearly $1 billion.

A federal judge in the U.S. District Court of Northern Illinois approved a proposed settlement that would have AT&T Mobility repaying an estimated maximum of $956.16 million in improper taxes charged to customers who use AT&T phones to access Internet services. Bartimus Frickleton filed lawsuits in all 50 states alleging that AT&T violated the Internet Tax Freedom Act, which places a moratorium on taxes on Internet access until Nov. 1, 2014. Those lawsuits were consolidated into one case in federal court in Illinois in 2010. Settling the distribution of tax refunds will be a particularly complicated and onerous process. AT&T did not keep the excess taxes that were charged to consumers. That means — depending on state and local laws where excess taxes were collected — that AT&T has to collect tax refunds or it will receive a credit from a state or municipality and deposit the amount of the tax credit into an escrow account to be paid out later to consumers. AT&T also had to calculate how much excess tax was collected from consumers because certain portions of a consumer’s bill were appropriately taxed and other portions were not.