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Is it legal to charge taxes and other fees on early termination fee?

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Is it legal to charge taxes and other fees on early termination fee?

I paid my last bill and cancelled service. I received a final bill with ONLY early termination fee on it, no service charge because I cancelled. ATT charged me taxes, service fees and other fees on the early terminatio fee. I had two phones and fee came to $155 per phone for $310. 

As I said they added taxes and other charges to this which come to about $75 bringing total bill to$385. I'm wondering if this is even legal to collect service fees and taxes on a penalty charge. I don't pay tax on late fees or bounced checks, so why should they charge for a early termination fee?

It also is unfair. My other charges on my regular bill came to about $25 per month wile I did have serve. Now that I DON'T have service they want $75? This is outrageous and again, I don't think it is legal. I am contacting my local representative to find out how they can do this, it seems they do it to everyone. 

 

I've offered to pay the $310 and no fees or taxes but they won't accept. I told them they can have nothing or $310 as agreed in contract and they chose nothing. What dopes.

 

I've been through this before. They send lots and lots of collection letters and then settle for about half in the end. It cost them a fortune to collect so little. That's some kind of stupid. And I have excellent credit and lots of it so this little thing won't bother me a bit.

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Message 1 of 18
ACE - Sage
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Accepted by ACE - Sage (ACE - Sage)
Accepted by lizdance40
‎04-01-2016 7:42 AM

Re: Is it legal to charge taxes and other fees on early termination fee?

The early termination fee is not a "penalty".  It is the balance of your unused service contract because you agreed to pay for 24 months service.  

 

Taxes and fees are collected per your state and federal law, ATT doesn't have any choice and they don't get to keep that money. 

 

 

(The following is included after all posts to save typing) I don’t work for AT&T. My replies are based on experience and reading content available on the website. Our answers are honest, but not always appreciated. If you posted personal information, please edit and remove.
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Message 2 of 18
ACE - Master
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Accepted by ACE - Sage (ACE - Sage)
Accepted by lizdance40
‎04-01-2016 7:42 AM

Re: Is it legal to charge taxes and other fees on early termination fee?


@bayridge09 wrote:

I paid my last bill and cancelled service. I received a final bill with ONLY early termination fee on it, no service charge because I cancelled. ATT charged me taxes, service fees and other fees on the early terminatio fee. I had two phones and fee came to $155 per phone for $310. 

As I said they added taxes and other charges to this which come to about $75 bringing total bill to$385. I'm wondering if this is even legal to collect service fees and taxes on a penalty charge. I don't pay tax on late fees or bounced checks, so why should they charge for a early termination fee?

It also is unfair. My other charges on my regular bill came to about $25 per month wile I did have serve. Now that I DON'T have service they want $75? This is outrageous and again, I don't think it is legal. I am contacting my local representative to find out how they can do this, it seems they do it to everyone. 

 

I've offered to pay the $310 and no fees or taxes but they won't accept. I told them they can have nothing or $310 as agreed in contract and they chose nothing. What dopes.

 

I've been through this before. They send lots and lots of collection letters and then settle for about half in the end. It cost them a fortune to collect so little. That's some kind of stupid. And I have excellent credit and lots of it so this little thing won't bother me a bit.


I'm sure the AT&T legal and accounting teams are quite informed about what taxes, fees, and other charges they must collect for the various jurisdictions where AT&T offers service. 

 

You state "$310 as agreed in contract". The contract also states that you will pay applicable taxes and fees. You are the party trying to reneg on your contractual obligation, not AT&T. 

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Message 3 of 18
Contributor

Re: Is it legal to charge taxes and other fees on early termination fee?

I had the same issue plus they included in the final bill the monthly data plan charge plus taxes and then issued credit for the monthly data plan but no credit was issued  for the tax they charged for the data plan.. However the biggest frustration was calling ATT to discuss, after you finally get past the automated system (20 minutes) and get to talk to a real person they have no knowledge of how resolve the issue. The ATT service person said since I Paid my bill there is no way to refund the overbilling????? I asked to speak to her supervisor and that was a bigger waste of the time, no wonder they are losing customers.   I was with ATT for 20 years and switched to Sprint; I would never consider ATT in the future or would I recommend it to anyone!

Message 4 of 18
ACE - Expert

Re: Is it legal to charge taxes and other fees on early termination fee?


@Phildntx1 wrote:

I had the same issue plus they included in the final bill the monthly data plan charge plus taxes and then issued credit for the monthly data plan but no credit was issued  for the tax they charged for the data plan.. However the biggest frustration was calling ATT to discuss, after you finally get past the automated system (20 minutes) and get to talk to a real person they have no knowledge of how resolve the issue. The ATT service person said since I Paid my bill there is no way to refund the overbilling????? I asked to speak to her supervisor and that was a bigger waste of the time, no wonder they are losing customers.   I was with ATT for 20 years and switched to Sprint; I would never consider ATT in the future or would I recommend it to anyone!


There are no taxes on DATA plans atleast not here in IL.  As internet cant be taxed per the fed gov.

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Message 5 of 18
ACE - Sage

Re: Is it legal to charge taxes and other fees on early termination fee?


@Phildntx1 wrote:

I had the same issue plus they included in the final bill the monthly data plan charge plus taxes and then issued credit for the monthly data plan but no credit was issued  for the tax they charged for the data plan.. However the biggest frustration was calling ATT to discuss, after you finally get past the automated system (20 minutes) and get to talk to a real person they have no knowledge of how resolve the issue. The ATT service person said since I Paid my bill there is no way to refund the overbilling????? I asked to speak to her supervisor and that was a bigger waste of the time, no wonder they are losing customers.   I was with ATT for 20 years and switched to Sprint; I would never consider ATT in the future or would I recommend it to anyone!


@GLIMMERMAN76 is correct, data plans are not taxed.  Your line fee is subject to taxes and fees.

Whether or not ATT chooses to issue a credit or do a buy one get one free on phones does not change the fact that taxes and fees are collected first and are not refunded.

 

The government will get theirs no matter what.

 

(The following is included after all posts to save typing) I don’t work for AT&T. My replies are based on experience and reading content available on the website. Our answers are honest, but not always appreciated. If you posted personal information, please edit and remove.
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Message 6 of 18
Contributor

Re: Is it legal to charge taxes and other fees on early termination fee?

All  telecommunication service providers are required to contribute to the federal USF.

FCC doesn't require telecommunication servie providers to pass on this charge to its customers, but it allows them to do so.

AT&T like many other providers passes on this charge to its customers as a % of their monthly charges.

And since they bill in advance, this charge (fee/surcharge) is also billed in advance.

Upon cancellation of service, there should not be any plan fees for the next month as these are also charged in advance. And there should also not be any USF.

However, when there is a contract termination fee in the last bill, AT&T billing systems will still calculate ta "Federal Universal SERVICE Charge" as a % of the termination fee. This does not seem right at all. You are not a customer, not receiving service, and they are still charging a "Service charge".

People should complain to FCC. 

Message 7 of 18
ACE - Sage

Re: Is it legal to charge taxes and other fees on early termination fee?

@victor2017

An early termination fee is a charge for services the customer agreed to use, but choose not to.  

Since we do not know the content of these taxes, we cannot comment.  But as written earlier, I'm sure ATT knows which fees and taxes are legitimate and bill accordingly.  

Since contacts have not been offered in just over a year, this will not be a problem for much longer.

When terminating service with a Next installment, the only amount owed on the phone is the balance printed on the bill.  

 

(The following is included after all posts to save typing) I don’t work for AT&T. My replies are based on experience and reading content available on the website. Our answers are honest, but not always appreciated. If you posted personal information, please edit and remove.
Award for Community Excellence 2019 Achiever*
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Message 8 of 18
Contributor

Re: Is it legal to charge taxes and other fees on early termination fee?

FCC – (888-225-5322); https://consumercomplaints.fcc.gov

Message 9 of 18
Contributor

Re: Is it legal to charge taxes and other fees on early termination fee?

@lizdance40

I appreciate your response and this community. I am sure AT&T knows about their billing line items. However, let's not tell ourselves that their bills are always right without seeking clarifications for questionable line items. 

As we all know, AT&T has been fined multiple times for billing issues. The most recent is: https://www.ftc.gov/enforcement/cases-proceedings/refunds/att-refunds

I can also share that Cingular (which got rebranded to AT&T some years after aquiring AT&T) and T-Mobile did not charge a federal universal service charge on the early termination fee when  I was a subscriber with them. There are also samples of actual bills posted by people where they show the provider had charged state and other taxes on the early terminaton fee, but not universal service charge.

I will be happy to share what I hear back from FCC or AT&T as I've filed a complaint at the FCC website.

Message 10 of 18
ACE - Sage

Re: Is it legal to charge taxes and other fees on early termination fee?

Agreed.  You should always read your bill.

As you noted it is up to the carrier to absorb or pass on the taxes and fees.  Because the vary by state, most pass them on.  The new T-mobile plan is supposed to absorb them in one fee.

 

(The following is included after all posts to save typing) I don’t work for AT&T. My replies are based on experience and reading content available on the website. Our answers are honest, but not always appreciated. If you posted personal information, please edit and remove.
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Message 11 of 18
Contributor

Re: Is it legal to charge taxes and other fees on early termination fee?

  • This is one of the reasons I am reluctant to go back to ATT.  
  • AT&T fees are over the top and the bills I received looked more like tax bills.  
  • The price you advertise is no where near what I will end up paying and you somehow can't give me an example of what my final bill would be each month.  Would buying a car like that (not knowing what all the extras would cost)?
  • You've lowered the price to $64 for DirectTV + Internet + Phone but I bet my bill will be about $100 by the time you'd be done.
  • Your poor CEO Randall Stephenson made $28.4 Million last year and will earn $31.5 million this year-- a 13.1% increase that every other American would give their left nut for. He's intent on shipping all customer service jobs overseas but wants American consumers to buy AT&T product and services.  You put people through prompt h-e-l-l and frustrate us to no end. Then we get someone overseas who we can't understand.  That's not adequate service for me.  
  • Judge Green (http://deadline.com/2017/03/att-ceo-randall-stephenson-2016-compensation-1202041171/) was right in 1982 to break AT&T up only to see it put back together again.  It needs to be split again into non-regional companies that compete with one another and that cannot be merged with or acquired by any other company.
  • While the NEW LOW PRICE of $64/mo for two years PLUS TAXES with early termination fees SEEMS enticing, I know I will end up on the phone yelling at someone in a foreign country.  
  • I know in the end I will regret it as I have every time I've tried your service.
  • I've got better things to do with my time.

{edited for word filter evasion}

 

Message 12 of 18
ACE - Sage

Re: Is it legal to charge taxes and other fees on early termination fee?

Taxes for ATT, Verizon and Sprint are based on your state and federal tax rates.  You can calculate the amount here:    https://www.wireless.att.com/cell-phone-service/additionalcharges/

I used my own bill to test the calculator and what I pay is less than the calculator says by 34 cents per line.     Taxes are on the line fee only.  Tax on a $40 line fee would be more than on a $20 line fee, which is the current line fee.

Cellular quotes are for service only.  Prices for phones vary widely and should be added to the service price.  

TV prices for any provider are always service only.   It's like pulling teeth to get equipment cost included, but you can ask.  I thought I recal someone writing that Satellite TV isn't taxed.

The introductory price includes a bunch of free channels that will stop being free in 24 months.  My answer was to drop the channels, which you can do at any time.  I choose to not have them at all so we wouldn't get hooked.

 

 

(The following is included after all posts to save typing) I don’t work for AT&T. My replies are based on experience and reading content available on the website. Our answers are honest, but not always appreciated. If you posted personal information, please edit and remove.
Award for Community Excellence 2019 Achiever*
*The views and opinions expressed on this forum are purely my own. Any product claim, statistic, quote, or other representation about a product or service should be verified with the manufacturer, provider, or party.
Message 13 of 18
ACE - Master

Re: Is it legal to charge taxes and other fees on early termination fee?


@RStephenson wrote:
  • I've got better things to do with my time.

{edited for word filter evasion}

 


The fact that you would come here and type up a long rant about how you don't want AT&T suggests otherwise.

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Message 14 of 18
Contributor

Re: Is it legal to charge taxes and other fees on early termination fee?

True, except that some of these fees and/or portion of some fees are "recovery" fees that carrier lobby state and local government to impose onto customers and are subsequently returned to the carrier.  It is incorrect to say that all fees and taxes do not benefit the carrier.

 

If one wants to break the shackles of fees and restrictions, buy an unlocked phone on the open market and sign up for Google's wireless service.

 

 

 

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