Attorney General Greg Abbott filed suit against Sprint Nextel Corp., saying the company's breaking the law by "implying that an additional fee on customers' bills was a state-imposed tax."
He's aggravated about the company's line-item "reimbursement" for the state's new business tax. That tax isn't due next year, but it applies to business activity in 2007. Sprint and Nextel put it on customers' cell phone and wire-line bills starting last month.
Comptroller Susan Combs wrote to the company last week, objecting to their use of the term "reimbursement" for a tax that's not yet been paid. And she wrote that that one percent fee the company is charging its wireless customers is higher than the maximum margins tax rate of 0.7 percent. That, she said, "appears to clearly conflict" with state tax laws. She asked the company to remove the charge from its bills until the Legislature has a chance to act. A spokesman for the company said they haven't done wrong and won't be taking any corrective action.
In his lawsuit, Abbott agreed with all of that as a violation of the state's deceptive trade practice laws, and said the company is also violating an agreement with Texas and 31 other states who won a settlement with the company after suing it for deceptive billing practices. The company didn't agree to any wrongdoing at the time, but signed off on an agreement that has a section that, according to Abbott, applies to the current situation. He wants the courts to issue an injunction.
This is from the 2004 agreement:
"On Consumers' bills, Carrier will:
"a. separate (i) taxes, fees, and other charges that Carrier is required to collect directly from Consumers and remit to federal, state, or local governments, or to third parties authorized by such governments, for the administration of government programs, from (ii) monthly charges for Wireless Service and/or Enhanced Features and all other discretionary charges (including, but not limited to, Universal Service Fund fees), except when such taxes, fees, and other charges are bundled in a single rate with the monthly charges for Wireless Service and/or Enhanced Features and all other discretionary charges; and
"b. not represent, expressly or by implication, that discretionary cost recovery fees are taxes."
