Cellphone firm fails to evade 911-service tax

AZ Supreme Court refuses to take appeal of prepaid provider
2013-06-08T00:00:00Z Cellphone firm fails to evade 911-service taxHoward Fischer Capitol Media Services Arizona Daily Star
June 08, 2013 12:00 am  • 

PHOENIX - A cellphone company has failed in its bid to escape a special state tax that pays for 911 services.

Without comment, the Arizona Supreme Court refused to review a Court of Appeals ruling that the tax on all wireless providers applies to all of their phone lines. That rebuffs a contention by Virgin Mobile that the tax applies only to companies that provide regular cellphone service and not prepaid phones.

The ruling means Virgin Mobile USA won't get back more than $619,000 it paid for prepaid phone service.

The fight is over a state 911 tax. Phone companies are required to pay a monthly fee for each activated wire and wireless account, with the cash used to finance emergency telecommunications services.

Between October 2002 and July 2006, the company paid $619,149 for its prepaid wireless cellphone services based on the law at that time setting the fee at 37 cents per month. It since has been reduced to 20 cents per month per line.

Later in 2006, though, the company sought a refund, arguing that the levy does not include prepaid wireless services.

The difference is how customers use the service.

Traditional cellphone companies bill customers each month. But under a prepaid system, users buy a provider's phone, activated on the company's wireless service, and then pay for airtime.

In its ruling, the appellate court first rejected the company's contention it is not a "provider" of phone service.

Judge Peter Swann, writing for the Court of Appeals, said it was clear lawmakers wanted to subject both hard-wired and wireless accounts to the levy.

Attorneys for Virgin Mobile argued unsuccessfully that the law and the monthly tax apply only to services that are billed monthly. That, they argued, makes it inapplicable to its own service in which customers pay only when they need more airtime. The appellate judges rejected that contention.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Featured businesses

View more...

Deals, offers & events

View more...

Event Calendar

Today's events | Add an event

Most viewed: