February 24, 2005

No less than 4 national mobile-phone carriers have filed a lawsuit in Maryland Tax Court, against the City of Baltimore seeking more than $2 million in refunds, of all the wireless taxes paid since August of last year.

T-Mobile USA Inc., Sprint PCS, Cingular Wireless L.L.C. and Verizon Wireless said they will pass refunds on to consumers if the lawsuit is successful.

The suit is the second step in the process of challenging the tax. In December 2004, the wireless companies filed a refund request with the City of Baltimore. That request was denied.

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The wireless carriers are asking the court to find that this tax was imposed illegally, to overturn this tax, and to grant a refund of all funds remitted to date.

The companies claim that this tax is illegal for two reasons.

First, they assert the tax applies to any wireless telephone subscriber account that has a home or business address within the city-without regard for whether that service was actually used within the jurisdiction or partly or completely outside that jurisdiction.

The companies say that the city has exceeded its taxing authority by taxing activities that occur and value that exists outside the boundaries of the city.

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The carriers also claim Baltimore exceeded the taxing authority granted to it by the state, because this is a sales tax, and the city is prohibited from imposing sales taxes by Maryland law.

"With this action, the wireless industry is sending the message that it is determined to stand up to unfair taxes in Maryland and around the country," said Kenneth Silverberg, a partner in the law firm of Nixon Peabody LLP, which represents the four wireless companies.

"If government officials think that imposing taxes on wireless companies is going to be an easy way to raise revenues, they should think again, because these companies are committed to fighting unfair taxes-which represent additional costs to their customers."

Source: RCR News