The URL can be used to link to this page

Home My WebLink AboutDeclaration of Chesley Dillon and ExhibitsDocuSign i — 1D:E854BE54-1510-4D08-A356-44AFF3667740 1 2 3 4 5 6 7 8 9 10 I 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 BEFORE THE HEARING EXAMINER OF THE CITY OF RENTON RE: TracFone Wireless, Inc. Administrative Appeal Declaration of Chesley Dillon in Support of Tracfone's Dispositive and Pre -Hearing Motions Chesley Dillon, being of full age, declares under penalty of perjury of the laws of the State of Washington and the United States: 1. I am the Vice President Corporate Taxation for TracFone Wireless, Inc. ("Tracfone") appellant in the above captioned action. This declaration is based on my personal knowledge and on the books and records of TracFone. 2. TracFone is a non -facilities -based seller of prepaid wireless airtime. 3. TracFone purchases wireless airtime from facilities -based carriers and resells the airtime on a prepaid basis at both retail (to end -users) and at wholesale (to businesses who purchase prepaid wireless airtime from TracFone for the purpose of reselling it). 4. It is TracFone's general practice to obtain resale certificates from the retailers and distributors to whom TracFone sells prepaid wireless airtime at wholesale. 5. Attached as exhibit I hereto are representative samples of resale certificates provided to TracFone by wholesale buyers. DECLARATION OF CHESLEY DILLON IN SUPPORT OF TRACFONE'S DISPOSITIVE AND PRE -HEARING LANE POWELLPc MOTIONS - I 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 125110.0002/8328623.1 DocuSign II peID: E854BE54-1510-4D08-A356-44AFF3667740 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 6. TracFone does not have any physical stores. 7. TracFone's retail sales of prepaid wireless airtime are made via the internet and/or by calling a toll free (1-800) telephone number. 8. TracFone's wholesale sales of prepaid wireless airtime are made to retailers such as WalMart, Fred Meyer, and Target, who purchase the prepaid wireless airtime for the purpose of reselling it at retail to end -users. TracFone also makes wholesale sales of prepaid wireless airtime to distributors who purchase prepaid wireless airtime for the purpose of reselling it at wholesale (either to retailers or to other distributors, both of which are themselves purchasing the prepaid wireless airtime for the purpose of resale). 9. The amount TracFone charges retailers and distributors for wholesale sales of prepaid wireless airtime purchased for the purpose of resale is less than the suggested retail price. TracFone does not control the price at which retailers and distributors resell prepaid wireless airtime. 10. The amounts charged by retailers who make retail sales of prepaid wireless airtime that they purchased for resale (at wholesale) is not TracFone's income, it is the income of the retailer who makes the retail sale. 11. As a hypothetical example, if TracFone sold a 30-day unlimited airtime card at retail for $30 dollars on its website, it would sell a 30-day unlimited airtime card to a retailer (i.e. Walmart or Fred Meyer) for a lower, wholesale price, for illustrative purposes let's say $24 dollars. When Walmart or Fred Meyer sells that 30-day unlimited airtime card to a retail buyer (whether for the SRP of $30 dollars or something lower, perhaps $29 dollars), the amount the retail buyer pays Walmart of Fred Mayer (whether $29 or $30) is not TracFone's income. 12. TracFone does not own, operate, or manage any telecommunications facilities in Renton or anywhere else. DECLARATION OF CHESLEY DILLON IN SUPPORT OF TRACFONE'S DISPOSITIVE AND PRE -HEARING MOTIONS - 2 125110.0002/8328623.1 LANE POWELL Pc 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 DocuSign II pe ID: E854BE54-1510-4D08-A356-44AFF3667740 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 13. During the Renton audit conducted by Tax Recovery Services, LLC ("TRS"), TRS requested and received data from TracFone regarding TracFone's income from retail sales of prepaid wireless airtime to buyers in specified zip codes. Initially TRS requested retail sales data for the zip codes 98055, 98056, 98057, 98058, and 98059. After receiving that data, TRS asked for retail sales to zip code 98178, which TracFone also provided. 14. TRS also requested data distinguishing the percentage of airtime used for II intrastate, interstate and international calling, and for intereet access (data), which data TracFone provided on a national basis. 15. Finally, TRS requested the percentage of total company -wide sales that were made at retail. Again, TracFone provided the requested data. 16. TRS multiplied the amount TRS had computed as TracFone's "direct sales" into Renton by the ratio of TracFone's national retail sales to total company -wide sales, the product of which TRS then labeled "non -direct sales." The figures TRS labeled "non -direct sales" are not TracFone's income, are estimates of retailers' income from the retailers' retail sale of prepaid wireless airtime the retailers purchased at wholesale for the purpose of resale. 17. Throughout the audit, TracFone repeatedly requested to meet with TRS and the City to discuss TracFone's business activities and the application of Renton's telephone utility tax to those activities. TRS repeatedly refused. 18. Following TRS's refusal to meet with TracFone in September 2017, TRS informed TracFone that the assessment was on hold. 19. TracFone heard nothing further regarding the assessment for eighteen months until receiving a letter dated February 14, 2019 enclosing TRS's "Methodology" and the assessment schedules and demanding payment of tax, penalties, and interest within 20 days. 20. On June 17, 2019 TracFone petitioned for a correction of the assessment pursuant to RMC 5-26-18.A. DECLARATION OF CHESLEY DILLON IN SUPPORT OF TRACFONE'S DISPOSITIVE AND PRE -HEARING MOTIONS - 3 125110.0002/8328623.1 LANE POWELLPc 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 DocuSign II pe ID: E854BE54-1510-4D08-A356-44AFF3667740 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21. On October 17, 2019, Renton issued its final determination, which "determined that the City's February 14, 2019 assessment was correct." 22. As required by RMC 5-26-18.B, TracFone paid the assessment in full in the amount of $336,442.69 on November 6, 2019, and filed its appeal to the Hearing Examiner. EXECUTED at Miami, Florida, this 29th day January, 2021. DocuSigned by: 1C2060FEA4174DB... unesley "Mon DECLARATION OF CHESLEY DILLON IN SUPPORT OF TRACFONE'S DISPOSITIVE AND PRE -HEARING MOTIONS - 4 125110.0002/8328623.1 LANE POWELL Pc 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 DocuSign II pe ID: E854BE54-1510-4D08-A356-44AFF3667740 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 CERTIFICATE OF SERVICE I hereby certify under penalty of perjury of the laws of the State of Washington and the United States that, on the date listed below, I caused to be served a copy of the attached document to the following persons via electronic mail: Kari L. Sand Ogden Murphy Wallace P.L.L.C. 901 Fifth Avenue, Suite 3500 Seattle, WA 98164 ksand@omwlaw.com Cynthia Moya Renton City Clerk 1055 So. Grady Way Renton, WA 98057 cmoya@rentonwa.gov olbrechtslaw@gmail.com January 29, 2021 1 3:44 PM PST Executed on the day of January, 2021, at Seattle, Washington. DocuSigned by: s/Norma TsuboaN�m& fi • Njobl Norma Tsuboi L B9465D4DBF2A461... cg,a1 r»013Lam DECLARATION OF CHESLEY DILLON IN SUPPORT OF TRACFONE'S DISPOSITIVE AND PRE -HEARING MOTIONS - 5 125110.0002/8328623.1 LANE POWELL Pc 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 EXHIBIT I DECLARATION OF CHESLEY DILLON 125110.0002/8346927.1 Aevbed Om000, Pate I a 4 UNIFORM SAW dr USE TAX CERTMCA'1 E --M1J MURISDICITON I • 7 IIt1ow•listed states have indicated Ilat this fat of certificate 6 aecephble, subject to the notes on pagu 2.4. The imta and the r ipi�m(.t, love the resptmaibllity of determinlag the proper use of this certificate under applkable laws ib each state, u there may chugs ^ fi be to time. i I1,1red to Seller, ^ Tradans Wireless, Inc. Aifirar 8390 NW 25th St Miami,FL 33122 ! testify dteL la mg4ed u a registered NtmeofFirm(Buyer): Wal-Mart Stores, INC. Wholesaler 702 SW 81h Street Mmlwro x� Sella(Glifomta) ��'� Bentonville R 72712.0555 _tester (see notq Y on pap 2.4) 1 and Is registered with the below listed shies and cities withla whloh your Ann would deliver purrhasa to us ad that any such pwri= uelfor wholesale, male, birodients or compowto of a now product or senicel to be resold, leucd, or routed in the eorrrw course of W!Mcts. We arc in the budwes of wholessilug, rehilltrg, msmtteenuiog, deubtg (reeling) the followvrg; i 4 D*dpdon ofsu ww. Retail Discount Merchandiser 3 GAaal description of Imgibk property or taxable service; to be purchased from the idler. E IelessPhones and Assessories State State Rogistrulon, Seller's State State Registratign, Selleei Pernik, or ID Number Permlt, or ID Mymbef of Pnrchsset of Purch m iI AZ 05-004286-R 14M 02-480961-006 AR 019212-78-001 NV 33982088 CA 30-694346 ND 130964 CO 09-49518.OW UT 65$18 HI 10481737 WA 601336 273 3 IA 0-00.006194 In 000310571-5 IL 0365.8104 KS 004.710415188F-02 MN 3632313 j NE 148660103 i I furdser cntlfy that if any property or service so purchased tax fro 6 used or consumed by the firm as iotmA4 it mbject to a We or Uses Tax we will pry the tax due directly to the proper hxing authority when a* law so provides or infori the seller for added tax bUling. We tettiflate shah! be a part of each order which we may bereathr SM to you, unleu otherwise s, cif!4 and shall be vsH until canceled by m In writing or revoked by the dry or rate. Under pouldos of perjury, I swan or affirm that U lafamatiou thin form trap and correct as to evap outedat maser, Authorized Sigmture: Title: 5enlor Tax Manager Date: v •s -•-. " C"I li:zy PAUL 2/4 RightFax JAN. 24. 2007 10: HAM SEARS ACCTG 214 265 3465 R10. 498 P. 1 M RZVMM HINGTON $rAT-4 RESALE CERMICATE I. Name of Seller: TracFone Wireless, Inc. 2. Name of Buyer/Business: Kmaa 3. xddiess ofruycr: 3iC0 W EIG ^cIEA'v Rai, TROY';MI 48U84 street' City, State & Zip Code 4, Buyet's Tax, Rezistration Number ,,A 019 028 5. Buyer is in the business of 6. Types of items purchased for resale: Cellular telephones, accessories and prepaid airtime cards. 77w buyer certifies that it is purchasing the items -listed' on line 6 (please check appropriare box): ❑✓ For' resale in the regular course of business withouPintervening use. ❑ For use as an in,Vedient or component part of a new article of tangible personal property to be produced for sale, ❑ as a-^Izmical to be used in processing a new article of tangible personal property to be produced for sale, or ❑ for use as feed, seed, seedlings, fertilizer, or spray materials in its capacity as a farmer. The buyer acbwwledges that it is solely responsible for purchasing tivithin the categories listed on line 6. The buyer ackngwleage,s_that misuse of the resale Privilege subjects the buyer to a penalty. of SO,percent of t}te tut dire, to addition to the tax, interest, and any other penalties imposed by law. print Name: Steve Hamilion � Name of �crson Authorised IIy the Buyer co Sir, the Resale C��c�cc '�.—.----�- Signature: siswturc Effective Date: ,� Y z Fla Date Signed: 0 t- z. 4— C, 7 �uu onaca 9gcat or tee suycr thiourh W 6 —0 t --p q (RO To Exceed 4 Yet7rg) Seller must maintain a copy. ,Please do ,:ot send to Dgparttrrent of Reventre. Reference Rule and Statute (RCW 82.08.130 and VvAC 458?0.102) 9T icy' assivzance, visit i it-'://donses'g v G: CL11 1-300-6474706. To : i ui'? P-boLi, tllc cV a(n n.P.7,nntn11 4 rnF (i T`,77 `11a•2Jlil:-t"�nbz?lu" docu,-iet1'c'_I7. ....... ...__.. _._ .... _ --.__._-_.� 17(1 7S 7oiWn -+c>r• i �!1/', .I't'7C1" RightFax 10/19/07 11:29 PAGE 4/4 RightFax RightFax 6/29/06 7:06 PAGE 2/2 RightFax JUN. 28. 2006 12,")5PM SFEARs ACCTG 214 265) �)465 NO. 424 UNIFORIVI SALES & USE TAX CERTIFICATE MULTIJURISDICTIONAI. ISSUED'rO SELLER: VENDOR NAME: TracFone Wireless, Inc. ATTN; ADDRESS: 9700 N.W. 112`i' Avenue Miami, FL 33178 I CERTIFY THAT: the Kmart Corporation is engaged in the business of selling tangible personal property at retail and is registered with the taxing jurisdictions listed below. We certify that the purchases from your firm are for inventory held for retail sale in the ordinary course of business by the Kmart Corporation. Description of Business: MASS MERCHANT, DISCOUNT DEPARTMENT STORE. General description of products to be purchased from seller: GENERAL MERCHANDISE FOR RESALE. REGISTRATION REGISTRATION STATE NUMBER STATE NUMBER AtABAMA 0002651 NEBRASKA 7170785 ARIZONA 07-090376 NEVADA 38.0729500 ARKANSAS 019302-78.001 NEW JERSEY H-380.729-500/000 CALIFORNIA 98-037691 NEW MEXICO 01-400668-00-5 COLORADO 11-13223 NEW YORK 380-729.500 CONNECTICUT 0573980.000 NORTH CAROLINA 600226131 FLORIDA 80-8012426332-5 NORTH DAKOTA 9004E GEORGIA 200-20-(10582-0 OHIO 89.030053.45 HAWAII 20OK055 OKLAHOMA 105455 IDAHO 35455S PENNSYLVANIA 81-321931 ILLINOIS 006&692-0 RHODE ISLAND 114 INDIANA 100517846-000-2 SOUTH CAROLINA 400-10112-6.02 IOWA 0.00-OOC1173 SOUTH DAKOTA 380729500EST001 KANSAS 1110.0440 TENNESSEE 100309471 KENTUCKY 42366 TEXAS 1-38-3469160.5 LOUISIANA 6034268000 UTAH 0-93445 MAINE P00407EI VERMONT 37474 MARYLAND 00105578 VIRGINIA 300.999046-1 MASSACHUSETTS 360-729••500-001.03 WASHINGTON J-409.019-028 MICHIGAN B38.072.95-00 WESTVIRGINIA 38-072-9500-009-M MINNESOTA 8665492 WISCONSIN 5434 MISSISSIPPI 283-287:t WYOMING 25.000.3s8 MISSOURI 11334240 I further certify that if any property so purchased tax free is used or consumed by the firm as to make it subject to a Sales or Use Tax, we will pay the tax due directly to the proper taxing authority when state law so provides. This certificate shall be a part of each order which we may hereafter give to you, unless otherwise specified, and shall be valid until canceled by us in writing or revoked by the city or state. Under penalties of perjury, I swear or affirm that the information on this form is true and correct as to every material matter. Authorized Signature:0?11-/ Title.. iltwwvj-4 ✓"r Data: G)-10�