AT&T Affiliates Lose Appeal of Georgia Internet Tax Case

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By Chris Marr

AT&T affiliates lost a bid for recovering sales taxes collected from Georgia customers on wireless internet access when an appeals court ruled the company failed to follow state regulations requiring it to refund customers first.

The Georgia Court of Appeals on Feb. 21 agreed with a lower state court in dismissing the tax appeal by New Cingular Wireless PCS LLC and related entities. The companies were appealing the denial of a refund request by the Georgia Department of Revenue ( New Cingular Wireless PCS, LLC v. Ga. Dep’t of Revenue , Ga. Ct. App., No. A16A2003, 2/21/17 ).

The case is part of a nationwide effort for AT&T to recover millions of dollars in erroneously collected sales taxes on wireless internet access, related to the 2010 settlement of federal litigation. A similar lawsuit in Alabama was allowed to continue over the state revenue department’s objections in September, when that state’s civil appeals court declined to dismiss the case.

AT&T is reviewing the Georgia court decision and considering its options, company spokesman Marty Richter told Bloomberg BNA in an e-mail Feb. 22.

“We don’t stand to benefit from this lawsuit in any way,” Richter said. “Any refunded tax revenue will be passed along to the Class—people who are our customers and residents of Georgia, and who initially paid the taxes.”

The Georgia DOR and its counsel from the state attorney general’s office didn’t immediately respond to requests for comment.

Upfront Customer Refunds Disputed

The Georgia appeals court deferred to the DOR’s judgment in interpreting its own regulation, which the department said requires a dealer seeking a sales tax refund to reimburse the amount to customers upfront before the request will be considered.

AT&T argued that the regulation and related state law should be read as requiring customers to be refunded at a later point. The company said it would put millions of dollars at risk if it refunded customers before it knew whether the DOR would grant its refund request, according to the appeals court decision.

Judge Stephen Louis A. Dillard, writing the opinion for the three-judge appeals court panel, pointed to AT&T’s settlement agreement from the 2010 litigation to dispute the company’s point. The agreement provided for the company to pay refunds into an escrow account for customers whenever a taxing jurisdiction requires that the company reimburse customers before granting the company’s refund request, Dillard wrote.

The agreement “contemplates a scenario in which pre-payment to the customer is required but an ultimate refund from the Department is never obtained; and in such a situation, there is no ‘windfall’ to the customer because the amount pre-paid into escrow is returned to the appellants,” the judge wrote.

Bryan A. Vroon of Atlanta and Margaret C. Wilson of Wilson Agosto LLP represented the AT&T affiliates.

To contact the reporter on this story: Chris Marr in Atlanta at

To contact the editor responsible for this story: Ryan C. Tuck at

For More Information

The Georgia Court of Appeals decision is at

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