AT&T has been ordered to pay nearly $1 billion dollars ($924 million to be exact) related to taxes charged as a result of collecting fees for mobile internet access. For nearly five years between November 2005 to September 2010, AT&T had been charging customers taxes based on the total amount of the monthly bill including internet access, rather than charging taxes on the monthly rate of the voice plan and excluding internet access.
The judge presiding over the case in the Northern District of Illinois found that AT&Tâ€™s actions violated the Internet Tax Freedom Act, which stipulates that taxes must not be levied on internet access from November 1st of 2003 until November 1st of 2014. Rather than continue to litigate, AT&T has chosen to settle the matter and has admitted its wrongdoing. This comes at a critical juncture for AT&T as it faces declining consumer perception due to the purchase of T-Mobile and increased regulatory and industry scrutiny as a result of the purchase.