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{KCO2357257.DOC;1/07851.000003/ }
DECLARATION OF NATE MALONE IN SUPPORT OF THE CITY OF
RENTON’S MOTION FOR PARTIAL SUMMARY JUDGMENT- 1
OGDEN MURPHY WALLACE, P.L.L.C.
1601 Fifth Avenue, Suite 2100
Seattle, Washington 98101-1686
Tel: 206.447.7000/Fax: 206.447.0215
BEFORE THE HEARING EXAMINER OF THE CITY OF RENTON RE: TracFone Wireless, Inc. Administrative Appeal
DECLARATION OF NATE MALONE IN SUPPORT OF THE CITY OF RENTON’S MOTION FOR PARTIAL SUMMARY JUDGMENT
I, Nate Malone, declare under penalty of perjury under the laws of the State of
Washington that the following is true and correct:
1. I am over the age of eighteen, and I am competent to testify in court as to the
matters set forth herein and make this declaration based upon my personal knowledge.
2. I have worked for the Respondent City of Renton (“the City”) since March of
2017. I was first hired as a Tax Auditor and have been in my current role as the Tax and License
Manager since January of 2019. Prior to my employment with the City, I was a Tax Auditor for
the City of Tacoma from May of 2014 until March of 2017; prior to my employment with
Tacoma, I was a Field Auditor for the Washington State Department of Labor and Industries.
3. As part of my duties as the City’s Tax and License Manager, I oversee application
and administration of the City’s tax codes. Also, I am responsible to develop and maintain the
City’s business tax and licensing ordinances, rules, policies and procedures, render written
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{KCO2357257.DOC;1/07851.000003/ }
DECLARATION OF NATE MALONE IN SUPPORT OF THE CITY OF
RENTON’S MOTION FOR PARTIAL SUMMARY JUDGMENT- 2
OGDEN MURPHY WALLACE, P.L.L.C.
1601 Fifth Avenue, Suite 2100
Seattle, Washington 98101-1686
Tel: 206.447.7000/Fax: 206.447.0215
decisions and determinations for complex tax issues, and conduct audits in accordance with state,
local and federal laws.
4. The audit period at issue in this administrative appeal is from January 1, 2007
through May 31, 2013 (“Renton Tax Audit”).
5. Tax Recovery Services, LLC (“TRS”) conducted the Renton Tax Audit of
Appellant TracFone Wireless, Inc. (“TracFone”) per the Renton’s Utility Tax Code, Section 5-
11-1 and Section 5-23-4.
6. After reviewing the information that TracFone provided, it was determined that
TracFone did not pay any of the utility taxes that were due to the City under RMC Section 5-11-
1.
7. The total amount due to the City of Renton for the audit period is $336,442.69
which includes $147,108.72 for taxes, $36,777.30 for penalties, and $152,556.67 for interest.
Attached hereto as Exhibit 1 is a true and correct copy of the City’s final tax assessment, dated
October 17, 2019.
8. In my role as the City’s Tax and License Manager, I determined that TracFone is
taxable as a “telephone business” for providing “access to a local telephone network” under the
telephone classification of the Renton utility tax, on six percent (6%) of its total gross revenues
as those terms are defined in RMC Section 5-11-1.1 Specifically, TracFone provides prepaid
mobile wireless service to its end users by purchasing commercial mobile radio service at
wholesale from carriers and reselling that service at retail to its end users. My knowledge of
1 RMC 5-11-1 A. 2 TELEPHONE BUSINESS: The providing by any person of access to the local
telephone network, local telephone network switching service, toll service, cellular telephone service, or
coin telephone services, or the providing of telephonic, video, data or similar communication or
transmission for hire, via a local telephone network, toll line or channel, cable, microwave, or similar
communication or transmission system. It further indicates cooperative or farmer line telephone
companies or associations operating an exchange. Network telephone service” includes interstate
service, including toll service, originating from or received on telecommunications equipment or apparatus
in this State if the charge for the service is billed to a person in this State. “Network telephone service”
does not include the providing of competitive telephone service, the providing of cable television service,
nor the providing of broadcast services by radio or television stations.
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{KCO2357257.DOC;1/07851.000003/ }
DECLARATION OF NATE MALONE IN SUPPORT OF THE CITY OF
RENTON’S MOTION FOR PARTIAL SUMMARY JUDGMENT- 3
OGDEN MURPHY WALLACE, P.L.L.C.
1601 Fifth Avenue, Suite 2100
Seattle, Washington 98101-1686
Tel: 206.447.7000/Fax: 206.447.0215
TracFone’s business activities was obtained through my review of documents related to the
Renton Tax Audit of TracFone, information available in the public domain and my personal
experience as a TracFone end user. Attached hereto as Exhibit 2 is a true and correct copy of a
TracFone marketing brochure, which advertises that: “TracFone uses the networks of major
national wireless carriers.” See Ex. 2, last page (text above coverage maps).
9. Even though TracFone’s business activities as a prepaid wireless services
provider are widely known and publicly advertised, I became a TracFone customer in the fall of
2020 to confirm my understanding of how TracFone provides prepaid wireless services to its
customers. I purchased a TracFone-branded handset and airtime card from the Fred Meyer store
in Renton. To load the prepaid airtime minutes onto my TracFone-branded handset, I had to go
to TracFone’s website to obtain access to the wireless service and make and receive calls on my
TracFone-branded handset. Attached hereto as Exhibit 3 is a true and correct copy of the
TracFone-branded airtime card that I purchased. The back of the card states: “For use with
Tracfone service only,” and step 2 of the activation instructions states: “2. To Activate your
service, go to Tracfone.com or call 1-800-867-7183.” See Ex. 3, back of TracFone 60-minute
Basic Phone Card (bolded emphasis in original).
10. In addition, when I reviewed the “TracFone Wireless Terms and Conditions of
Service,” which are available at https://www.tracfone.com/termsandconditions, it is clear that
Tracfone provides wireless service to its customers (a/k/a end users and/or subscribers) by
providing its end users with access to wireless communications networks owned and operated by
licensed commercial mobile radio service providers (“carriers”). TracFone retains the right to “at
any time and without prior notice to [customers], modify, cancel, and/or deactivate your Service
and/or take other corrective action, for any reason in our sole discretion, including, your
violation of these Terms and Conditions of Service.” Attached hereto as Exhibit 4 is a true and
correct copy of TracFone’s current Terms and Conditions of Service. Based on my personal
experience, Fred Meyer provided the handset and card, and TracFone, not Fred Meyer, engaged
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{KCO2357257.DOC;1/07851.000003/ }
DECLARATION OF NATE MALONE IN SUPPORT OF THE CITY OF
RENTON’S MOTION FOR PARTIAL SUMMARY JUDGMENT- 4
OGDEN MURPHY WALLACE, P.L.L.C.
1601 Fifth Avenue, Suite 2100
Seattle, Washington 98101-1686
Tel: 206.447.7000/Fax: 206.447.0215
in the telephone business by providing network telephone service, specifically access to the local
wireless telephone network consistent with the definition of those terms in both the Renton
Municipal Code and the Revised Code of Washington.
11. I have also reviewed agreements between TracFone and network carriers.
TracFone’s agreement with T-Mobile makes a clear distinction between “end users” and retail
agents or “sub-dealers.” Attached hereto as Exhibit 5 are key excerpts from the agreement
between TracFone and T-Mobile (CONFIDENTIAL); see specifically, Ex. 5 at Section 1.19.
End users are defined as “a Person who obtains Service from Tracfone” Id. Service is defined to
mean “cellular radio service provided by T-Mobile…to provide telecommunications and data
transmission to and from Devices.” Ex. 5 at Section 1.44. “Sub-dealers” as referred to in the
agreement are “agents, distributors, and representatives.” These terms make a clear distinction
that Tracfone is not providing or selling network telephone service to “sub-dealers,” such as
Wal-Mart, and instead provide the service directly to “end users” who ultimately use the network
telephone service or Service as defined in this agreement.
12. This distinction between “end users” and retail agents or “sub dealers” is further
emphasized when reviewing agreements between TracFone and retailers, specifically the
agreement with Circle K. Attached hereto as Exhibit 6 are key excerpts from the agreement
between TracFone and Circle K (CONFIDENTIAL). In the Circle K agreement under Section
2.C, there are clear terms that differentiate the “retailer” (Circle K) which sells airtime codes
provided by TracFone to end users, and “end-users” who are the party who would redeem the
airtime codes. Ex. 6 at Section 2.C. Airtime codes must be activated/redeemed by the end user to
allow access to the local telephone network. Id.
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{KCO2357257.DOC;1/07851.000003/ }
DECLARATION OF NATE MALONE IN SUPPORT OF THE CITY OF
RENTON’S MOTION FOR PARTIAL SUMMARY JUDGMENT- 5
OGDEN MURPHY WALLACE, P.L.L.C.
1601 Fifth Avenue, Suite 2100
Seattle, Washington 98101-1686
Tel: 206.447.7000/Fax: 206.447.0215
SIGNED this 29th day of January, 2021 at Renton, Washington.
By /s/Nate Malone
Nate Malone
Tax and License Manager for the City of Renton
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{KCO2357257.DOC;1/07851.000003/ }
DECLARATION OF NATE MALONE IN SUPPORT OF THE CITY OF
RENTON’S MOTION FOR PARTIAL SUMMARY JUDGMENT- 6
OGDEN MURPHY WALLACE, P.L.L.C.
1601 Fifth Avenue, Suite 2100
Seattle, Washington 98101-1686
Tel: 206.447.7000/Fax: 206.447.0215
CERTIFICATE OF SERVICE
I, Kenya Owens, an employee of Ogden Murphy Wallace, PLLC, certify that on the date
below, I filed and served the Declaration of Nate Malone, and exhibits thereto, in support of City
of Renton’s Motion for Partial Summary Judgment via email on the following parties:
TracFone Wireless, Inc. Scott Edwards Lane Powell, PC 1420 5th Avenue, Suite 4200 Seattle, WA 98101 EdwardsS@LanePowell.com Grant S. Degginger Lane Powell, PC 1420 5th Avenue, Suite 4200 Seattle, WA 98101 DeggingerG@LanePowell.com
I declare under penalty of perjury under the laws of the State of Washington that the
foregoing is true and correct.
Executed at Seattle, Washington this 29th day of January, 2021.
/s/Kenya Owens
Kenya Owens
Legal Assistant