AT&T sued for illegally collecting taxes for data

In the last month, wireless provider AT&T has been sued in several states over allegedly illegally collecting taxes for its phone data access plans. Cases are being files in Georgia, Indiana, and Alabama, among others, with each arguing that under the federal Internet Tax Freedom Act, AT&T is not allowed to collect taxes on data plans until 2014. The plaintiffs argue that AT&T's data plans clearly fall under the Internet access category, which the law clearly bans from taxation.

The lawyers in each individual case found a person to bring the largely identical cases to the judge, which they hope will be classified as class action lawsuits. In most cases, lawyers argue the tax is a guise for a way to collect more revenue, while in others they say AT&T keeps a small percentage of the tax to cover the cost of compliance.

Exactly what constitutes Internet access will likely be the point of contention in the courtroom, if the cases ever make it that far. The Government Accountability Office says Internet access sold to consumers and businesses is exempt from tax, but Internet services sold to ISPs isn't, though states do not entirely agree on this difference. The GAO goes on to say telephone service, video service and VoIP should be taxed because the fall under telecommunications service rather than Internet access. [via Ars Technica]

By Electronista Staff