Verizon Wireless filed its central office equipment under the general tax rate rather than a lower manufacturing tax rate, according to a letter sent to the Clay County administrator.
The Mar. 25 letter states that Clay County owes Verizon Wireless a tax refund of $13,205.90 because of the mishap.
It was sent from Revenue Discovery Systems, a third party tax collection service the county has used since at least 2002, said Mary Wood, county administrator.
RDS collects taxes for more than 250 cities and counties in Alabama.
“We have not sent them any money,” said Roy Johnson, county commission chairman. “Until we get more information we’re not paying anybody anything.”
Administrator Wood has not contacted RDS since she received the letter.
Portfolio Recovery Associates, a Virginia-based company that owns RDS, declined to comment on the matter.
Questions posed to Verizon Wireless about the size and scope of the paperwork error went unanswered Tuesday.
Central office equipment is the backbone of telecommunications, said Jeff Kagan, industry analyst. When a call goes out, a signal reaches a cell phone tower and is transmitted to a central office where it’s routed to another computer and central office, eventually reaching a landline phone or emitting a signal from another tower, he explained.
Quality of service is tied to the quality of this central office equipment, Kagan said. Data transfer is the telecommunication industry’s growth area, and competition to provide the fastest, smoothest service is cutthroat.
Companies invest billions each year to stay ahead of each other, he said.
“Every year the customers keep on expecting more,” Kagan said. “It just keeps on ratcheting up, year after year after year.”
The letter informing Clay County of its refund obligation cites a “recent Alabama court case” allowing central office equipment to be taxed at a lower rate, but does not identify the case.
Officials in the Alabama Department of Revenue were unaware of any such case.
A 1988 court case involving the Gulf Telephone Company and the state revenue department found that central office equipment is subject to a 1.5 percent sales tax rate, rather than the general tax rate, court records show. The current general sales tax rate is 4 percent, according to the Alabama Department of Revenue.
Only one call has been put into the League of Municipalities, said Tracy Roberts, an attorney with the League. No one had informed the League of a court decision as far as he knew, and he has not seen a letter from Verizon Wireless.
No other county in The Star’s coverage area has received a letter from Verizon Wireless regarding a tax refund.
No county has called the Association of County Commissions of Alabama, said Mary Pons, attorney for the association. She was unaware of the Verizon Wireless refund request prior to a Tuesday afternoon interview.
“It needs to be looked into more carefully than, ‘Ok, they want this money back, send it back to them’,” Pons said. “I’m kind of surprised that I don’t know about it.”
Clay County’s requested refund was reduced by 25 percent, the letter from RDS states. It offers to arrange payment plans to “help all jurisdictions affected by this large refund brought on by the misfiling of Verizon Wireless.”
Despite the reduction, swallowing an unplanned $13,205.90 expense won’t be easy for Clay County, Chairman Johnson said. The rural east Alabama county has a budget of about $1.8 million, he said.
“We got to slice something else,” Johnson said. “You can’t spend money you don’t have.”
Star staff writer Jason Bacaj: 256-235-3546