AT&T’s $10M Alabama Refund Case Avoids Dismissal

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Chris Marr

AT&T affiliates’ $10 million tax refund petition on behalf of Alabama customers survived another state attempt to have the case dismissed, as a state appeals court denied a petition for rehearing ( Ala. Dep’t of Revenue v. Decatur RSA LP , Ala. Civ. App., No. 2150811, application for rehearing denied 3/17/17 ).

The AT&T affiliates and their customers effectively met the requirements of the state’s Taxpayers Bill of Rights (TABOR) to jointly petition the revenue department for a refund, the Alabama Court of Civil Appeals found in a March 17 decision.

Even though the AT&T companies—Decatur RSA LP and AT&T Mobility II LLC—petitioned the revenue department on behalf of customers, the court found the company was acting on customers’ behalf, as a class of customers authorized the company to do under a settlement agreement in previous federal litigation.

“AT&T substantially complied with the filing requirement set out” in the Taxpayers Bill of Rights, Judge Terry A. Moore wrote in the court’s 5-0 decision.

The court previously ruled in favor of the AT&T affiliates on Sept. 2, 2016, declining to grant the Alabama Department of Revenue’s request for an order to dismiss the case. The state had petitioned the court to rehear that matter, raising the TABOR arguments for the first time.

The case springs from a 2010 settlement agreement in class action federal litigation against AT&T over improperly collected taxes that customers said violated a federal ban on taxing internet access. Under the settlement, AT&T and affiliated businesses agreed to seek refunds of mobile telecommunications taxes from state revenue departments, including Alabama, on behalf of their customers.

AT&T won a final order from the Alabama Tax Tribunal on May 6, 2015, that instructed the revenue department to refund $9.9 million, which the Montgomery County Circuit Court affirmed.

Federal Agreement Valid

The Alabama appeals court also disagreed with the revenue department’s position that the federal settlement wasn’t valid because it improperly imposed requirements on state tax agencies. The court found the agreement only authorized AT&T to seek refunds on behalf of customers—it didn’t require states to grant the refunds.

AT&T had no comment on the case beyond telling Bloomberg BNA that any refund recovered in the case will be paid to the company’s customers.

The revenue department attorney handling the case, David Avery, couldn’t immediately be reached for comment.

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 March 17 decision is at

Copyright © 2017 Tax Management Inc. All Rights Reserved.

Request Daily Tax Report: State