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AT&T charged customers for a corporate tax that it doesnt have to pay

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Enlarge / An AT&T store in Chicago.Getty Images | jetcityimage

AT&T charged customers in Portland, Oregon for a corporate tax that AT&T doesn't actually have to pay. AT&T has agreed to provide refunds to customers who were wrongly charged the tax over the past few months, but it's facing a lawsuit that seeks additional payments of at least $200 to each of those customers.

AT&T's mistake relates to Portland's new Clean Energy Surcharge, a 1% tax on retail sales in the city. AT&T has been passing this tax along to its mobile customers, even though the city law exempts utilities such as AT&T from the tax.

"The city only recently notified us that we are exempt from the tax," AT&T said a statement Friday, according to The Oregonian. "We will be issuing refunds to our customers."

The fee, listed on AT&T bills as a Portland Clean Energy Surcharge, was as low as 5¢ per month. The Oregonian wrote that one of its employees "reported being charged 23 cents in April, 7 cents in May and 5 cents every month after until September.

But AT&T's decision to charge the fee at all is concerning, especially in light of AT&T's long history of charging hidden fees that aren't disclosed in its advertised prices. There's been confusion among other entities about who actually has to pay the Portland tax. But AT&T probably should have realized that it didn't have to pay the tax because of the exemption for utilities, which was adopted in April 2019.

Portland says the exemption applies to "any entity operating a utility within the City" and says that utilities include "those entities defined in the Utility License Law (ULL) definitions section of PCC 7.14.040(I) 'Utility' and those entities that provide the services listed in PCC 7.14.040 (H), 1 through 8."

Mobile service—what AT&T offers—is #7 on that list.

We asked AT&T why it started charging customers before making certain that it actually had to pay the tax, and whether the tax applies to other AT&T services such as DirecTV. We also asked AT&T whether it actually paid any money under the new tax to Portland before realizing it was exempt. We'll update this article if we get any answers.

"The company wouldn't say how many people will be refunded, when it will occur or how much money has been collected," the Oregonian wrote.

AT&T also charges property-tax fee

Last week, we wrote about another strange fee that AT&T charges. AT&T charges business Internet customers a "property tax" fee in multiple states to cover its own property taxes and recently raised the fee in California from 2.92% to 7%.

AT&T isn't required to pass these fees along to customers in separate line items, but doing so lets AT&T advertise lower prices than it actually charges. The practice also lets AT&T raise customer bills whenever it wants to, even when customers are under contracts that require them to pay early termination fees if they cancel service.

Class-action lawsuit

AT&T's actions in Portland led to a class-action lawsuit being filed against it on Friday. The complaint filed in Multnomah County Circuit Court said:

In an effort to profit and to obtain an unfair advantage over its competitors, AT&T misled thousands of Oregon customers into paying unlawful five cent surcharges that AT&T was not permitted to collect. AT&T only said Read More – Source