Judge Gives Preliminary OK To $92.5 Million Settlement In Phone Tax Lawsuit
LOS ANGELES (CBSLA.com) — If you used a phone in the city of Los Angeles between October of 2005 and March of 2008, you might have some cash coming to you.
Under a tentative settlement given preliminary approval this week, Los Angeles will pay up to $92.5 million to taxpayers and attorneys over long-running lawsuit over a city telephone tax, according to reports.
A Los Angeles County Superior Court judge granted the preliminary approval to the proposed settlement Thursday, according to Los Angeles City Attorney's Office spokesman Rob Wilcox.
The settlement traces back to a lawsuit filed back in 2006 (PDF) by taxpayer Estuardo Ardon alleging the city's telephone users tax was illegally collected because it had been levied on services not subject to a federal tax, according to the Los Angeles Times.
More than two million residents and businesses could be affected by the settlement on the phone tax, which was collected over a two-and-a-half-year period that ended in 2008.
Refunds would be offered only to people who paid such taxes during a time window before the telephone users tax targeted in the lawsuit was replaced with a slightly lower tax approved by Los Angeles voters seven years ago.
City Administrative Officer Miguel Santana, who serves as the chief financial adviser to the Mayor and City Council, told KNX 1070 NEWSRADIO officials will make it simple for eligible taxpayers to apply for a refund.
"All they have to is sign under penalty of perjury that they paid that tax, they have to provide us the phone number that they used and the address, and they will receive" the estimated $30 rebate, Santana said.
Customers who submit detailed paperwork may be eligible to collect even more.
City leaders set aside $50 million this year as a reserve for legal liabilities tied to tax cases.
If the case had proceeded to trial, some officials estimated the city's potential liability would have been as high as $300 million, The Times reported.
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