Tuesday, March 1, 2011

Can You Tax Me Now?


Have You Checked Your UUT's Lately? No it isn't something in your blood, or an organ or hidden area on your body. It is a tax that municipalities charge on all the utilities used within their borders including your cellular phone bill.

I was going through my Verizon Wireless bill this morning and noticed a local UUT (Utility User Tax) billed to my account from a city that I previously lived in two moves ago — about 5 years ago. I called Verizon to check on this and see why I was being charged a local tax for a city I had not lived in for almost 5 years!

I was told that although I had updated my 'billing address', the 'service address' in their system showed the previous address in Santa Monica, CA. I am now residing in, and have been for almost 5 years now, an unincorporated city in Los Angeles County. Each of these cities have their own UUT. There are some cities that do not in California and nationwide.

The Verizon Customer Service agent was as helpful as possible, but when I noticed that she was simply going to just update my 'service address' and not look into whether I was being overcharged by the different municipality for five years totaling about $450. Depending on your income, the need for cell service and the price of gas to get to work, that could mean a huge difference in someone's life. Even if it doesn't break the bank, it is still at least a terrible error in billing oversight and at most fraud on the part of both the utility and the local municipality. The tax is levied by the city, collected by the utility as a part of its regular billing procedure, and then remitted to the city*.

If I had let it go another 10 years and with the current economic situations in local municipalities, there is a good chance Santa Monica will raise this tax another half percentage here and there over the course of that decade. These taxes seem to do very well on the ballot as they are a relatively minimal tax compared to income or property tax.

The UUT provides a great source of general purpose revenue for city governments regardless of size. Statewide, city and county utility user taxes generate about $2 billion per year* in revenue. In some cities, the UUT provides as much as 1/3 of the general fund (Holtville, Compton, Richmond)*.

I started to complain a bit more and ask if there was even a local UUT in effect in my current city. She stated she did not know and that the 'system' did not give them that information. So the person in charge of overseeing and correcting customer billing for a utility company does not have a list of current UUT's which are part of the billing for utility companies. It took me five minutes to check the internet for the current UUT's in all of California (See UUTinfo.org).

The Verizon agent seemed to take the stance that it was my obligation to change the 'service address' as well as the 'billing address' when updating my contact info even though I don't remember seeing that option when I last moved two years ago. They have done many site updates since I last moved making more updates available to the consumer - like the 'service address'.

I looked up all the California UTT's while I was holding for the manager after she apologized for the confusion and I asked, "Are you apologizing for my confusion or your confusion?" and continued with, "Shouldn't you say you are sorry for the erroneous billing error on your part?"

I am guessing the manager looked the UTT up as well, since after holding for about 5 minutes the agent came back on the line and told me her manager was willing to give me free service for a month. I figured that was a pretty fair trade. They can go after Santa Monica (10% UUT)** and get their monies back and pay Los Angeles' (4.5% UUT)** back taxes at less than half of the Santa Monica rate. That works out to about a $225 overcharge over five years for me (without interest) and even though that really covers about 1 3/4 months coverage, it seemed like a fair proposal and more than I would probably see from a class action. Although, if I were an attorney I would definitely look into this. I know I am not the only one to whom this has happened. Also, Verizon and other carriers could actually join in a suit against municipalities that do not update their resident information in a timely manner and refund those utilities where errors occur.

Anyway, just want everyone to check all the UUT's in their utility bills and make sure that they are being taxed correctly, since the tax collection falls on the shoulders of the utility rather than the municipality. Definitely check your wireless bills at the very least if you have moved since 1986 and had the same carrier the entire or even just a good amount of the time. Keep all your info updated including the 'service address'.

NOT RESPONSIBLE FOR THIRD PARTY CONTENT.