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Phone Tax Revolt? Calif. Supreme Court OKs Class Action Against LA

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LOS ANGELES (CBS) — Taxpayers stand to receive up to hundreds of millions of dollars in telephone tax refunds after the California Supreme Court ruled to allow a class action lawsuit against the city of Los Angeles to move forward.

The unanimous ruling on Monday by Justice Ming W. Chin — which upheld the right of citizens to sue local governments for collecting allegedly illegal taxes — could have far-reaching affects beyond L.A.

Los Angeles County, Long Beach, and Chula Vista all have similar lawsuits claiming that the governments have illegally taxed telephone users.

Attorneys expect the decision to nudge those claims forward in court, according to the Los Angeles Times.

The case against Los Angeles was filed in 2006. The city argued that the taxpayers should have filed individual claims for refunds before bringing a class action and won in the trial court and the appeals court.

But as a result of Monday’s ruling, “It’s possible we will consider bringing actions against other jurisdictions,” Frank Gregorek, who argued the case for the taxpayer, told The Times. The class that would recover funds would include all residents who paid the taxes.

During the years at issue, Los Angeles charged users a 10 percent tax on their phone bills, he said. City voters later approved the tax but lowered it to 8 percent. The city did not immediately respond.

(©2011 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)

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