Cingular halts surcharge on bills

Cingular Wireless has suspended a small monthly surcharge on cell phone bills in Washington state pending the outcome of a federal lawsuit filed in Spokane, the company said Thursday.

The action affects thousands of Washington business and residential customers of Cingular, the nation’s largest cell phone company.

The lawsuit was filed in February by Leavenworth resident Melissa Morse. Morse, a Cingular customer, says the company is illegally adding a surcharge to her monthly bill and using that tax to pay its own corporate business and occupation tax to the state.

Until that suit is resolved, Cingular has suspended the tax — which amounts to a few pennies per month on each bill, depending on the plan — Cingular’s Northwest region spokeswoman Anne Marshall said.

Marshall said she could not comment on the suit, filed in U.S. District Court.

The suit also seeks to become a class action representing all of Cingular’s Washington state subscribers. If a judge approves class-action status, Cingular could face repayment of a large sum to thousands of individual customers for retroactive compensation.

Marshall said the company does not disclose how many subscribers it has in Washington.

Attorneys for Morse filed the suit after reviewing a state Court of Appeals decision last fall that upheld a verdict against a Spokane auto dealer on the same issue.

The court affirmed a Spokane judge’s 2004 ruling that Appleway Automotive Group could not add a separate B&O tax when a customer buys a car or truck.

Both the trial court and the appeals court said state law does not allow companies to simply pass the B&O tax on to their customers.

Attorneys for AutoNation, the parent owner of Appleway, have asked the state supreme court to review that decision. They claim the surcharge is allowed if customers are made aware of the tax in invoices or statements.

In the meantime, Appleway has removed the B&O surcharge from vehicle sales, said Brian Sheldon, an attorney for plaintiff Herb Nelson in the suit against the auto dealer.

Washington requires a B&O tax on businesses. The amount varies depending on the type of company and volume of revenue it generates. Cingular and other wireless companies face a state B&O tax of roughly one-half of 1 percent of customer revenue.

Among other wireless companies, Sprint-Nextel also adds the tax surcharge to customers. Verizon Wireless does not; attempts to contact T-Mobile Wireless were not successful.

In December, Qwest Communications stopped adding the tax surcharge on Washington state customers’ long-distance bills.