City Council Minutes 2011 07 19 - Laserfiche WebLink

Home Browse Search

City Council Meeting Minutes July 19, 2011 Page 7 of 8 Mayor Sisk requested a Staff presentation. City Manager Fleming explained in November 2010, the City received a refund claim on behalf of customers of AT &T Mobility in the amount of $82,175.25. This claim resulted from a class action lawsuit filed against AT &T Mobility for the collection of sales tax on the sale of internet access services. This tax is prohibited under the Federal Internet Tax Freedom Act and Colorado statute. The claim requested a refund of taxes erroneously collected by AT &T Mobility from its customers and remitted to the City for the five years prior to November 2010. AT &T Mobility included the erroneously collected tax in its monthly remittances together with sale tax on other taxable services. Under the Louisville Municipal Code and Charter there are certain requirements and a statute of limitations. Through the appeal process and discussions with the claimant, the applicable refund period is three years, which reduces the refund claim from five years to three years and from $82,175.25 to $67,157.93. While the appeal has been pending, the court in the class action lawsuit has issued its final order approving a class action settlement agreement that provides a mechanism for deposit of refunded taxes into an escrow account for the (benefit of the class. That settlement agreement provides customers in the settlement class will receive refunds after legal fees, and other costs are deducted from available funds. City Attorney Light explained the City Staff negotiated a potential settlement of the claim, which avoids further administrative and /or court appeals and provides amounts refunded are handled according to the court- approved class action settlement agreement. The "Settlement Agreement" provides the following: The City will refund $67,157.93 via a one -time payment; The refund payment will be deposited in an escrow account for benefit of the settlement Class as prescribed by the class action settlement agreement; All proceedings on the refund request will be vacated; and The City will be released of all further liability for the claim. The refund claim in this case concerns 2,116 customer accounts for which Louisville is designated as the principal place of use (PPU) of the service. Staff has tracked three years of activity for these accounts from copies of the original invoices, through the documentation provided by AT &T Mobility, and ultimately to the schedule supporting the amount of refund claim. Staff recommended a settlement for the three -year amount of $67,157.93. A budget amendment is proposed concurrently with this Agreement to provide for funding of the settlement. The $67,157.93 would be borne by the General Fund, Conservation Trust Land Fund, Historical Preservation Fund, and the Capital Projects Fund. COUNCIL COMMENTS