Class Action Lawsuit Filed In Connectiut Against AT&T Over Internet Access Tax

On January 11, 2010, a class action lawsuit (download here) was filed against AT&T alleging that it improperly charged sales tax to access the Internet in violation of Connecticut law and the Internet Tax Freedom Act.

The case was brought on behalf of David Rock who subscribed with AT&T for a "wireless data plan that permits access to the Internet by radio device."  The plan permits Internet access remotely by computer or smartphone, such as an iPhone or BlackBerry.

The complaint alleges improper charges from AT&T for state and local sales taxes on internet access on monthly bills.  The complaint is based in part on Connecticut General Statutes 12-407(a)(26)(A) which excludes Internet access from the state’s sales tax on telecommunications.  The Internet Tax Freedom Act also prohibits taxes on Internet access.  The complaint alleges thousands of potential members for the class in Connecticut.  The complaint alleges breach of contract and violation of Connecticut’s Unfair Trade Practices Act.

Nate Anderson of ars technica reported on several identical lawsuits filed in Georgia, Indiana, and Alabama over the last month.  Mr. Anderson reported that the same lawyers where behind the multiple filings.  In a Hartford Courtant article today by Matthew Sturdevant, the attorney for Mr. Rock,Michael Koskoff, noted that perhaps a dozen similar suits will be filed in various states.

Mr. Anderson made a humorous comment that all the complaints in the Georgia, Indiana, and Alabama cases have the same typo or misuse of the word  "I-Phone" rather than iPhone.  The complaint in the Connecticut case has the same misuse of "I-Phone."  So, either there is some cooperation nationwide on the plaintiff side on the content of the complaints or perhaps none of the lawyers involved own iPhones.   

In any event, these cases will be interesting to track as all of the lawyers involved on the consumer side have significant experience in class action lawsuits, including against telecom providers.  I also agree with Mr. Anderson that the actual definitions of "sales tax" and "Internet access" might seem simple enough, but can actually be quite complicated.  I expect AT&T will make use of those complications.