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AT&T Pays $76 Million In Back Taxes

CLAYTON, Mo. - AT&T Mobility will pay $76.3 million in back taxes and legal fees in a tentative settlement of a dispute with more than 300 municipalities on whether cell phones are two-way radios or telephones.

AT&T claimed the phones are two-way radios, and so not subject to local utilities taxes.

The settlement, in St. Louis County Court, was granted preliminary approval by Judge Bernard C. Drumm Jr. and could end six years of litigation between AT&T and more than 300 municipalities.

The municipalities must approve the settlement, then get Judge Drumm's final approval in May 2008.

AT&T will pay $65.4 million in back taxes and $10.9 million for legal fees, the settlement states.

Ted Wagnon, an AT&T spokesman, said there will be no change in customers' bills: AT&T collected the taxes from customers under protest, so customers will not have to pay more now because of the settlement.

Verizon settled its back-taxes case this year for $29.5 million.

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