Facts

New Cingular Wireless PCS LLC (New Cingular) provided telecommunication services to customers within the City of San Francisco (City). The City imposed an access line tax on customers who subscribed to telecommunication services. From February 1, 2021, to August 31, 2021, New Cingular paid the access line tax to the State of California instead of to the City. When New Cingular remitted the access line tax of $5,861,195.73 to the City, the City issued an Access Line Tax Notice of Deficiency that imposed a late payment penalty of $1,206,559.17, interest of $338,749.24, and an underpayment tax of $3,609.06. On March 8, 2022, New Cingular paid $1,548,998.47 to the City. On March 16, 2022, New Cingular submitted to the City a Claim for Business Tax Refund that requested a refund of the penalty and interest paid of $1,545,308.41. By a letter dated June 15, 2022, the City denied New Cingular's claim for refund. New Cingular brought a lawsuit against the City and County of San Francisco; Jose Cisnearos, Treasurer of the City and County of San Francisco; and David Augustine, Tax Collector of the City and County of San Francisco.

PLAINTIFF'S CONTENTIONS: Plaintiff alleged that it relied on databases provided by designated database providers. Further, plaintiff maintained that its payment of the access line tax to California instead of the City was solely the result of an error or omission of a database provided by a designated database provider and an assignment of a street address to an incorrect taxing jurisdiction. Finally, plaintiff contended that, under the Mobile Telecommunications Sourcing Act, it should have been held harmless for the late payment of the access line tax, and the penalties and interest in dispute should be waived and refunded to plaintiff. As a result, plaintiff sought a refund of penalties and interest totaling $1,545,308.41 that were imposed by defendants from February 1, 2021, to August 31, 2021.

DEFENDANTS' CONTENTIONS: The case settled before defendant filed an answer.

Result

Defendants agreed to pay $463,593 to settle the case.