In $30 Million Settlement, Verizon Admits Cell Phones Are Phones

ST. LOUIS - Verizon will pay nearly $30 million to 100 Missouri cities to settle a case on municipal taxes. Verizon said it already has paid $12.5 million and will pay the other $17 million without charging customers for it.

Verizon began paying municipal taxes under protest a year ago and charged customers for it. Verizon and other cell phone companies claimed they are exempt from municipal utility taxes because cell phones are not telephones, but two-way radios. Cities filed a class-action in 2001 in St. Louis County Court against Verizon, AT&T, Sprint Nextel, US Cellular, T-Mobile and Alltel. Faced with litigation, the cell phone companies tried to get the Legislature to enact tax caps. When that failed, they sought a settlement. A Sept. 12 hearing is set in St. Louis County on whether to declare the case a class action, which could have sought a $100 million judgment against Verizon alone. With that hearing approaching for the other cell phone companies, AT&T officials indicated they too are open to a settlement.

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