CITY HALL — Burbank and Glendale could be on the hook for $1 million each in response to claims filed by AT&T against cities across the nation.
The claim filed with both cities last month is in response to a settlement agreement AT&T reached in a class-action lawsuit in which consumers alleged that taxes collected for Internet-related services — including data plans, laptop connect cards and pay-per-use data services — broke federal law.
The taxes were collected as part of municipal utility users taxes, which are generally charged to all users of electricity, water, gas, telephone and cable services.
"We strongly deny any wrongdoing, and no court has found that AT&T Mobility committed any wrongdoing," Marty Richter, an AT&T spokesman, said in an e-mail. "However, we have agreed to settle these cases to avoid the burden and cost of further litigation."
As part of the agreement, the company has agreed to attempt to recover the taxes from the various taxing agencies nationwide. Any fees recovered by AT&T would be returned to plaintiffs in the class-action lawsuit, Richter said.
AT&T is seeking roughly $1 million in refunds each from Burbank and Glendale for taxes collected on mobile Internet access between November 2005 and September 2010, according to the legal claims.
But Glendale City Atty. Scott Howard said that under a city statute, refund claims can only cover taxes collected in the past year.
"Anything beyond one year, it would be our contention right out of the gate, 'Forget about it,'" he said.
Glendale and Burbank have retained outside counsel to help handle their responses to the claims.
The outside law firm will be working on the issue for many Southern California cities, which will help keep the legal fees down, Howard said.
"The bad news is we have to deal with it," he said. "The good news is the outside counsel in this case will be billing us on a proportionate basis."
There are other issues that need to be addressed, he added, including how AT&T calculated the amount owed and whether the company has the authority to collect the tax refund for customers.
For more information on the AT&T class-action settlement, visit http://attmsettlement.com/FAQs.aspx.