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Wireless Firms Fight Taxation In Maryland

By Annys Shin
Washington Post Staff Writer
Wednesday, December 15, 2004; Page E05

Cingular, T-Mobile, Sprint and Verizon Wireless are challenging the right of Montgomery County and the City of Baltimore to impose local taxes on wireless telephone lines.

In letters filed yesterday with the departments of finance in both jurisdictions, the four companies requested a refund of more than $12 million in taxes. The taxes are imposed on companies, which pass them on to consumers.

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Montgomery County levies a $2 tax on each cellular and land line per month; Baltimore imposes a $3.50 tax on each per month, according to Kenneth H. Silverberg, a partner with the law firm Nixon Peabody LLP who is representing the wireless telephone companies.

Montgomery began levying the tax in July 2003. Since then, the four companies have paid $12.9 million in taxes to the county and $2 million to Baltimore, which began taxing cell phone use last August, Silverberg said.

The refund request is the first step before the companies can file a court challenge. If the departments of finance deny the requests, the companies have 30 days to bring the matter to tax court. If the departments don't respond, the companies can go to court after six months, Silverberg said.

The companies cited two reasons for their challenge. First, the county and city can impose sales taxes only on utilities, and cellular phones are not defined as utilities, Silverberg said, adding that only the state can impose taxes on anything else.

Also, the county and city can't tax activities that occur outside its boundaries, Silverberg said, noting that cell phones can be used outside the county.

"This is a tax that is trying to spread the general cost of government only on people who use cell phones. That doesn't strike us as fair," Silverberg said.

Montgomery officials, however, are not backing down on their right to tax.

"The tax on wireless telephone companies is well within the authority of Montgomery County government, and we do not plan to honor the companies' request for a refund," said Montgomery County Finance Director Timothy L. Firestine. "At a time when the number of people using cell phones instead of land lines is increasing, it makes more sense than ever to apply the tax equally."

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