AT&T has been tasked with the enormous job of reimbursing customers for taxes paid on mobile Internet service under a $956 million settlement in a class action lawsuit.
The suit alleged the operator violated the Internet Tax Freedom Act, which bans taxes on Internet access.
Under the terms of the settlement, AT&T is required to get nearly $956 million in tax refunds from state and local authorities on behalf of plaintiffs in the class.
The tax refunds will be passed along to customers who initially paid the taxes on their mobile Internet service.
About 32 million people are covered by the settlement, according to a June 2 order from a judge in the U.S. District Court for the Northern District of Illinois.
AT&T has denied any wrongdoing in the case and has stopped charging some taxes and fees on its data plans.
“AT&T Mobility collected only those taxes that we believed we were required to collect, and passed them along to state and local taxing authorities,” said AT&T spokesman Marty Richter. “While we strongly deny any wrongdoing, and no court has found that AT&T Mobility committed any wrongdoing, we agreed to settle these cases to avoid the burden and cost of further litigation.”
The settlement covers all AT&T Mobility customers who were charged taxes on Internet service between Nov. 1, 2005, and Sept. 7, 2010. The Internet Tax Freedom Act bars federal, state and local governments from taxing Internet access. The law was first enacted in 1998. Its moratorium on Internet taxes has been repeatedly extended and currently extends until 2014.
Filed Under: Industry regulations