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Home My WebLink About08. E-mail from TRS to TracFoneEXHIBIT C-8 This Email contains PRIVILEGED AND CONFIDENTIAL, PROPRIETARY INFORMATION intended only for the use of the Addressee(s) named above. TRS <crisp@trs-integrity.com> To:nford@tracfone.com Fri, Dec 11, 2015 at 3:04 PM Hi Nicholas, Thank for the email. We will review it and get back with you. Have a great weekend. Mike TRS <crisp@trs-integrity.com> To:nford@tracfone.com Thu, Dec 31, 2015 at 12:12 PM Hi Nicholas, Hope things have been going well with you. We hope to get back with you next week concerning the email below. I also wanted to check and see how things are coming along with the reconciliations (email sent to you on November 26th(sic)) for the different brands to the gross revenues that you sent us. Let us know if you have any questions. Thanks Nicholas. Have a Happy New Year! Mike This email and any files attached to it are the property of Tax Recovery Services, LLC. The contents may be confidential and proprietary, and any use or distribution of the information contained herein may be prohibited by law. If you are not a named recipient, or if you have received this email in error, please notify the person who sent it, and immediately delete it. TRS <crisp@trs-integrity.com> To:nford@tracfone.com Fri, Jan 8, 2016 at 2:26 PM Hi Nicolas, Hope things have been going well with you. We have replied to your comments below in bold lettering. This email and any files attached to it are the property of Tax Recovery Services, LLC. The contents may be confidential and proprietary, and any use or distribution of the information contained herein may be prohibited by law. If you are not a named recipient, or if you have received this email in error, please notify the person who sent it, and immediately delete it. 001724 From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, December 11, 2015 9:59 AM Subject: RE: Identifying redemption of airtime geographically & [ ] Hi Mike [ ] – relating to identifying redemption of airtime geographically – below. [ ] TracFone is a non-facilities based reseller of prepaid wireless airtime. Much of the company’s revenue is from wholesale sales of prepaid wireless airtime cards, and is not subject to local utility tax. RCW 35.21.714(1) (excluding the sale of telephone service “for resale” from local utility tax). While TracFone can track redemptions of airtime purchased by consumers from TracFone’s wholesale customers (i.e. Walmart and other retailers) according to the zip code provided by the end user when a handset is activated, those reports do not track either calls or service (airtime) usage, such information is not relevant to local utility taxes, which are imposed on gross revenue from intrastate toll telephone service. After reviewing your email we would have to disagree with your interpretation of the RCW quoted above; it is our understanding that this part of the RCW instead protects the company that sells the airtime to TracFone when it states: " . . . the city shall not impose the fee or tax on that portion of network telephone service which represents . . . charges for network telephone service that is purchased for the purpose of resale . . . " It is they that "charged" TracFone for the "service purchased for resale." Walmart is not selling telephone service. Walmart is not a utility provider. In the fact that TracFone sold the cards to Walmart, the State of Washington still sees TracFone as the seller of the utility to the customer, as the customers purchase a card from Walmart, but the customers are only buying the means of accessing the utility you are providing for them; the cards reference you, and your company is the company that connects them to the utility service. It is the utility service usage that you, and not Walmart, provide to the customer that is taxable by the City. All the utilities providing services through cards sold at Walmart must pay the utility taxes themselves. Another important point to note is that it is not sales that are taxed, but rather usage. But sinceTracFone does not keep track of airtime, the utility usage must be estimated, most likely using sales data. We need to know, then, if the data you are sending regarding billing sales includes the sales done by Walmart and other retailers. TracFone also makes direct retail sales of prepaid airtime to consumers. TracFone can track its direct sales of airtime by customer’s credit card billing address. However, only a portion of 001725 TracFone’s direct sales are subject to local utility tax in the consumer’s city. Local utility tax only applies to gross revenue from retail customers of intrastate toll telephone service; it does not apply to revenue from interstate telephone service, RCW 35.21.714(1), or to internet service. Community Telecable v. Seattle, 164 Wn.2d 35 (2008). Customers use prepaid wireless airtime not just (or even primarily) for taxable intrastate telephone service, but also for nontaxable interstate and internet service. Consequently, revenue from sales to consumers with a zip code in the [city] you are auditing for will need to be adjusted to deduct the portion of revenue from interstate telephone service and internet service. We agree that interstate and internet are generally not taxable. However, in the case of interstate long distance, Washington State law RCW 82.32.510 requires that the interstate portion be broken out in the regular course of business"; if not, the aggregate amount may be taxed. If TracFone does not do this, it is possible that your company will owe taxes on the whole of long distance charges. Would you be able to break out the interstate amounts? Regarding internet, since the data you sent us breaks out internet, these amounts will be easy to identify and would not be taxable. Let us know if you have any questions Thanks Nicholas. Have a great afternoon. Mike Nicholas E. Ford | Corporate Tax | TracFone Wireless, Inc. | O: 305.715.6500 extn. 3217 | nford@TracFone.com _______________________________________________________________ This Email contains PRIVILEGED AND CONFIDENTIAL, PROPRIETARY INFORMATION intended only for the use of the Addressee(s) named above. NOTE: There was a repeat of the above sent at 2:58pm. Same email. TRS <crisp@trs-integrity.com> To:nford@tracfone.com Fri, Jan 29, 2016 at 1:45 PM Hi Nicholas, Hope everything is going well with you. Also, just checking to see if you have had a chance to review the email below. 001726