House endorses phone tax legislation

House endorses phone tax legislation

	Published : Tue, 27 Mar 2007 15:00 By : Agencies Print this Story

JEFFERSON CITY, Mo. (AP) - Having been hung up on once by the state Supreme Court, Missouri lawmakers are trying again to limit local telephone taxes and cut off a growing court battle between cities and wireless phone service providers.

The House on Monday gave initial approval to legislation that would specifically allow local taxes on wireless phone providers, but cap the taxes that cities could levy on both wireless and traditional wireline phones.

The bill also would invalidate city lawsuits seeking hundreds of millions of dollars for several years worth of back taxes from wireless phone companies. The bill would declare the matter settled if companies pay three-months worth of taxes without any interest or penalties.

The legislation essentially would revive a 2005 state law, which the Missouri Supreme Court struck down last year because of the way it was written.

Lawmakers had exempted Clayton and Jefferson City from the provisions of the 2005 law, because Clayton had enacted a wireless phone tax by a vote of the people and Jefferson City had enacted a specific mobile phone tax decades ago -- before such devices were common.

But the Supreme Court said the exemptions amounted to an unconstitutional special law, and so struck down the whole measure.

This time, sponsoring Rep. Shannon Cooper, R-Clinton, has removed the two-city exemption and added a section specifically stating that the rest of the law can still stand if any part is struck down.

The three months of payments in lieu of the lawsuits also is new; the 2005 law wouldn't have given cities anything for the back taxes they claimed are due.

Cooper describes his bill as consumer protection -- noting the phone companies simply pass along the local taxes to their customers.

For lawmakers being lobbied to oppose the bill by their local government officials, Cooper urged that they shift their perspective. Local officials 'see a pot of money there that they are trying to extract from your constituents,' Cooper said.

But others expressed concern about the potential precedent of invalidating lawsuits while they are in progress.

'I don't think the Legislature should inject itself into disputes that are currently pending in our legal system,' said House Minority Leader Jeff Harris, D-Columbia, who is an attorney. 'If the parties want to reach a settlement, that's what the legal system is there for. ...Or, they go to trial.'

About one-quarter of Missouri's 1,000 cities tax telephone companies, nearly all of them relying on ordinances written before cell phones became common. The ordinances impose gross receipts taxes on companies providing such things as 'local exchanges' or 'telephone services.'

Many cell phone providers have refused to pay the taxes, arguing they don't apply because their service really is a radio transmission or because their devices are mobile. Dozens of cities have sued to try to collect the taxes.

More recently, wireless phone companies have filed their own lawsuits against the cities that are trying to collect the taxes. Sprint Nextel Corp., for example, has filed lawsuits in more than 50 Missouri counties. The wireless phone companies are seeking refunds of the taxes they have paid in protest since last year.

The Missouri Municipal League has estimated that if judges were to rule the taxes do apply to cell phone providers, the companies could have to pay between $300 million and $600 million in back taxes.