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Md. Tax Court Upholds Cell Phone Fees

Posted on: Tuesday, 4 July 2006, 15:00 CDT

BALTIMORE - Two of Maryland's largest jurisdictions did not overstep their authority by imposing cell phone fees, the state tax court has ruled.

The court rejected an attempt by four wireless providers to overturn Baltimore's $3.50 a month fee on cell phones and land lines imposed in 2004, and Montgomery County's $2 wireless fee imposed three years ago.

T-Mobile, Verizon Wireless, Sprint and Cingular Wireless challenged the fees in February 2005, arguing that they were really sales taxes, which only the state can impose.

The court ruled against the companies last week.

"The tax is not measured by the number of minutes that a customer uses his or her phone, or even by the number of calls made," the court wrote in its decision Thursday. "A flat tax on a telephone line, which does not vary depending on customer usage, is an excise tax rather than a sales tax under Maryland law."

Attorneys for the companies could not be reached for comment Tuesday to say whether they would appeal the decision.

The city's fee generated nearly $26.2 million in its first year, with $9.98 million coming from the wireless portion, city officials said. The city projects it will collect $28.6 million for the fiscal year that ended June 30. The Montgomery tax is estimated to have generated $45 million since August 2003.

Source: Associated Press/AP Online

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