Chula Vista residents taxed on their cell phone bill by the city can now get a refund.
As part of a recent $8 million settlement between the city of Chula Vista and two residents, the city will refund cell phone users taxed under the utility users tax.
Gayle Blatt, an attorney who sued the city, said Chula Vista had no right to apply the tax.
“The class rep and we agreed that the city of Chula Vista did not have authorization to tax service on mobile phone service,” Blatt said. “And that tax was being collected by the cell phone carriers and remitted to the city.”
Chula Vista City Attorney Glen Googins said the tax was never illegal and that it is in line with the 1970 utility users tax, which is a city tax on electricity usage, natural gas usage and telecommunications.
Googins said the city chose to settle the case because litigation would be expensive, so it is in the best interest of the city and its citizens to settle.
The $8 million settlement will be used to pay claims, administrative costs and legal fees, the city attorney said.
The money, Googins said, will come from the same pool where the money was collected.
Googins said the taxed money goes into the city’s general fund to provide a wide range of services.
Blatt said she does not know if cell phone providers knew if the tax was illegal.
“For the most part the carriers believed that they were authorized to accept the tax,” Blatt said.
The settlement gives residents three options in getting a refund.
The first is a $35 flat rebate, the other is for $50 for every year a resident paid the tax, up to $150, only if the tax can be proven, and the third option is to get a full refund for any resident who has proof of the total they were taxed, Blatt said.
Blatt said from the time the class action suit was filed to the time of the settlement, Chula Vista made about $11 million from the UUT.
She also said $8 million was a fair enough price to settle the lawsuit.
Chula Vista resident and plaintiff Carla Villa said she paid the city hundreds of dollars under the UUT from 2010 to present day.
Villa said she isn’t looking for a reimbursement, but rather to make residents aware that they can get their money back.
“I just want the residents to beware that this tax has been imposed on them illegally and, therefore, because of the class action suit the city of Chula Vista opened up $8 million to refund to cell phone users in Chula Vista,” she said.
Under the UUT, Chula Vista residents with a cell phone were taxed five percent.
Googins said because the tax is legal it is still being imposed on Chula Vista residents who have a cell phone billing address in Chula Vista.
He said the terms of the settlement will reduce the tax from five percent to 4.75 percent.
“The settlement doesn’t make any determination regarding the tax,” Googins said.
“The settlement settles the class action claim. And as part of the settlement, the city gets to continue to collect the tax, although we agreed it will be imposed and collected at a reduced rate.”
Court approval for the settlement is to be heard in September.
To file a reimbursement claim visit www.chulavistacellphonetaxsettlement.com or attend one of two town hall meetings at the Chula Vista Civic Library on Monday, June 17, and July 15 from 6 to 7:30 p.m.
The Chula Vista Civic Library is located at 365 F St.
Residents have until July 30 to file a claim for reimbursement.