Judge rules Missouri cities don't have to refund taxes paid by AT&T customers

Wednesday, January 15, 2014 | 7:30 p.m. CST

COLUMBIA — A U.S. District judge ruled Monday that the City of Columbia, along with 263 other Missouri cities and St. Louis County, doesn't have to refund any taxes that it collected from AT&T customers, according to a news release.

AT&T customers filed a class action lawsuit against the cities to get a refund for the taxes they weren't supposed to be paying. The telecom giant imposed surcharges on its customers to help pay for the local franchise taxes the cities started charging in 2008, according to the release.

Due to accounting and billing errors by AT&T, the cities were collecting taxes from revenue gained from providing Internet access services, which violates state and federal laws on taxing Internet access services.

AT&T tried to get the money refunded, but a Missouri state court in St. Louis County denied the refund in 2012. The customers then tried getting the money directly from the cities, but were also unsuccessful.

"The Court found that these charges to AT&T's customers were the result of accounting and billing errors by AT&T over a number of years," Michael Berry, a Jefferson City attorney, said in the news release. "This was not a situation of any city improperly taxing its residents."

The surcharge cost AT&T customers across the state many millions of dollars, said John Blattel, finance director of City of Columbia.

Blattel didn't know how much the suit would have cost the city if it had lost.

"It means that the city doesn't need to come up with the money to pay for AT&T customers," Blattel said.

The court made the right decision because it was AT&T that mistakenly surcharged the customer, he said.

The city has collected more than $1.2 million in taxes from AT&T in fiscal year 2013, Blattel said.

Supervising editor is Elise Schmelzer.

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