Schooley Mitchell Lawsuit Watch: Verizon’s Big Tax Bill

verizonIn this week’s Schooley Mitchell lawsuit watch we take a look at a case that Verizon recently lost in the Pennsylvania Supreme Court, forcing the telco to pay taxes on fees collected for installing phone lines, performing repairs and providing directory assistance.

According to the Daily Journal, the issue started 11 years ago when the Department of Revenue delivered Verizon a bill for an additional $48 million in taxes. The amount was lowered by its board of appeals to just $10 million. A subsequent ruling in 2013 by the Commonwealth Court put Verizon on the hook for revenues associated with installing lines and directory assistance, but said it didn’t have to pay for moving or changing lines, or any repairs.

But that’s all changed since the Supreme Court ruled that yes, Verizon does owe taxes on all of it. And others could be impacted by the decision – the Pennsylvania Telephone Association has warned the precedent means other companies may face hefty back tax bills related to other matters before the courts.

Chief Justice Thomas Saylor noted it has been over 70 years since the scope of gross tax receipts has been clarified by the Legislature.

“I find this state of affairs an unhappy one and would welcome a decision by the legislative branch to enter the field and provide guidance,” said Saylor, in his dissent.

Verizon refused to comment on the matter, as did the Department of Revenue, citing confidentiality.

Man facing prison in Verizon phone scam

In criminal news, a Los Angeles man is facing eight years in prison after pleading guilty to wire fraud. According to the Associated Press, Karen Galstian told Verizon he needed phones for drivers in his expanding business. He managed to purchase thousands of iPhones for 99 cents each under contract. He then sold them to companies who shipped them to emerging markets overseas. Galstian pocketed $13 million as a result of the scam. Considering he was also convicted of bank fraud in an earlier case, we suspect he’ll be spending lots of time behind bars.