T-Mobile Wrongly Denied $11.4M Refund, Ga. Court Told

Written by Maria Koklanaris - Law360 | Nov 3, 2021 | News | Print PDF

— A Georgia trial court erred in deciding that equipment T-Mobile South bought to build a broadband network was ineligible for the state’s high-tech exemption and an $11.4 million tax refund, business groups told a state appeals court.

In briefs filed Monday and Tuesday with the Court of Appeals of Georgia, local and state chambers of commerce and a group representing the tax interests of broadband companies told the court it should reverse the findings of a lower court. That court, the Superior Court of Fulton County, had held that the equipment was “telephone central office equipment or other voice data transport technology” and thus did not qualify for the high-tech exemption.

The superior court had reversed an earlier decision from the Georgia Tax Tribunal, which had held that T-Mobile’s network was built from computer equipment and the company should get an $11.4 million tax refund for tax years 2012 through 2016. To qualify for the exemption a company must spend at least $15 million on “computer equipment” in a calendar year. The company appealed the trial court’s decision in September.

The Georgia Chamber of Commerce, in an amicus brief filed Tuesday, told the appeals court that the Georgia Department of Revenue’s July clarification of the high-tech exemption, upon which the superior court relied, “should not be allowed to stand.”

Georgia’s clarification, which became effective July 1, specified that wireless voice systems do not qualify for the high-tech exemption. That was an “unpublicized and abrupt change in statutory application without any transparent process for public engagement or amendment,” the Georgia Chamber of Commerce said.

In its own amicus brief, filed Monday, the Broadband Tax Institute agreed.

“When department policy is made in secret and not publicized, such well settled expectations [that the original interpretation of the statute would be enforced] are wrongly deprived, and this court is under no obligation to defer,” the Broadband Tax Institute told the appeals court.

The company said in its appeal that the superior court was attempting to apply this clarification retroactively to T-Mobile South, the company said. But such a retroactive application is not appropriate because its equipment is computer-based and not a voice system, T-Mobile South said.

Finally, the Metro Atlanta Chamber of Commerce said in its Tuesday amicus brief that the superior court misunderstood the legislation that established the high-tech exemption in Georgia. The exemption was established to encourage investment in technology infrastructure, the Metro Atlanta chamber said. The way the superior court interpreted it renders it moot, the chamber said.

“The superior court misunderstood the statute in a way that, if carried to its logical conclusion, would disqualify investments in practically all modern computer technology,” the Metro Atlanta chamber said.

The Department of Revenue did not immediately respond to requests for comment. Representatives for the company declined to comment Wednesday.

The Metro Atlanta Chamber of Commerce is represented by Keith R. Blackwell and Lee A. Deneen of Alston & Bird LLP.

The Georgia Chamber of Commerce is represented by Judson H. Turner of Gilbert Harrell Sumerford & Martin LLC.

The Broadband Tax Institute is represented by Josh Belinfante and Daniel J. Monahan of Robbins Alloy Belinfante Littlefield LLC.

T-Mobile South LLC is represented by Eric S. Tresh and Alla Raykin of Eversheds Sutherland.

The Georgia Department of Revenue is represented by Mitch Watkins of the Georgia Attorney General’s office.

The case is T-Mobile South LLC v. Robyn A. Crittenden, Commissioner of the Georgia Department of Revenue, case number A22A0095, in the Georgia Court of Appeals.