Missouri city wins ruling on cellphone taxes

The 8th U.S. Circuit Court of Appeals affirmed that a Missouri city can recover back taxes from AT&T Mobility and Alltel Corp., a ruling related to convoluted litigation among scores of municipalities and wireless providers in which multimillion-dollar settlements have been the rule rather than the exception.
“Because we conclude that Springfield’s request for a declaratory judgment on the issue of liability was properly before the district court and that a cellphone is a telephone and cellphone services are telephonic services for purposes of Springfield’s tax ordinance, we affirm,” stated the 8th Circuit in a 32-page ruling.
The lawsuit was originally brought by the cities of Springfield and Jefferson City in 2004 against various wireless providers, which disagreed that a 6% gross receipts tax on traditional landline telephone service should also apply to cellphone service. The appeals court dismissed Jefferson City’s claims because it settled with wireless carriers.
Springfield said it settled a wireless tax lawsuit with Sprint Nextel Corp. last year. The No. 3 mobile-phone carrier also settled litigation with other Missouri cities, paying $52 million in the process. Likewise, Verizon Wireless shelled out $30 million to put Missouri municipal wireless tax litigation to rest. Even AT&T Mobility, a defendant in the Springfield wireless tax case, agreed to spend up to $76 million to end litigation with cities other than Springfield in the state.
“We are looking at the court’s ruling now. We have no comment at this time,” said Kerry Hibbs, an AT&T spokesman.
Alltel, a $28 billion acquisition target of Verizon Wireless, did not reply to a request for comment.
Alltel and AT&T Mobility can request a rehearing by the full court and seek a review by the U.S. Supreme Court.
T-Mobile USA Inc., like Alltel, does not appear to have settled wireless tax litigation with Missouri cities.
House and Senate lawmakers have sponsored legislation to freeze for several years new state wireless taxes deemed discriminatory. Passage of such legislation remains unclear, if not doubtful, this election year.