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News Release from Comptroller Susan Combs

Contact: Allen Spelce or R.J. DeSilva
512-463-4070

For Immediate Release
January 29, 2007

Comptroller Susan Combs Tells Sprint, "Not So Fast"


AUSTIN — Comptroller Susan Combs today asked Sprint to stop charging a "Texas Margin Fee Reimbursement" on customers' bills. The charge began appearing on bills this month, in an apparent attempt by the telecommunications company to pass the state's revised franchise tax directly through to Sprint customers.

"It's not unusual for a company to collect an amount identified as a reimbursement for a tax or a fee," Combs said. "But no such reimbursement for franchise tax has ever been approved by the Comptroller's office."

Combs said the Sprint bill implies that Sprint will pay a one percent tax on its gross receipts. But under the revised franchise tax, the effective tax rate on gross receipts cannot exceed 0.7 percent.

"Companies are prohibited by law from collecting more from their customers than the amount of tax the company will pay," Combs said.

The Comptroller also pointed out that the term "reimbursement" implies that the tax or fee appearing on customers' bills has already been paid by Sprint. But the state will not begin collecting the revised franchise tax until 2008.

In a letter to company officials, Combs asked Sprint to drop the new charge from its bills until the Legislature has an opportunity to address the issue.

"Failure to comply…could result in both audit and collection action by this office and a possible injunction by the Texas Attorney General," Combs wrote.

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