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HomeMy WebLinkAboutExhibit 63 Remake-3Exhibit 63 Remake; Section 3 TracFone - TRS Emails Renton TracFone Audit Re: TracFone Audit Questions - Responses Sent  TRS <crisp@trs-integrity.com> To:nford@tracfone.com Wed, Sep 7, 2016 at 1:48 PM Hi Nicholas, Hope you had a great holiday weekend. Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages? If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue." 6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above. Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?  Thanks Nicolas. Have a great afternoon. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17%(2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859   Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                 6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses      (1)   What is Internet (APP)?  Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:           OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone.          Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.           Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.            BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.  RE: TracFone Audit Questions - Responses Inbox  Nicholas Ford <nford@tracfone.com> To:crisp@trs-integrity.com Wed, Sep 7, 2016 at 2:09 PM Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you—as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audit s.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage =83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21% (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24% (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31% (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:           OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone.          Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.           Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.            BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    Re: TracFone Audit Questions - Responses Sent  TRS <crisp@trs-integrity.com> To:nford@tracfone.com Wed, Sep 7, 2016 at 2:13 PM Thanks Nicholas.  That sounds great. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you—as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audit s.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24% (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:           OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone.          Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.           Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.            BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.  TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Fri, Sep 23, 2016 at 1:53 PM Hi Nichols, Just checking to see if you have had a chance to take a look at our questions below. Thanks Nicholas. Have a great weekend. 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.  ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.     From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses  Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses      Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.         From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses        Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you—as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audit s.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.     2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses    Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.       From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses       Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses    Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.        From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses      Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.     From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.     From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.     ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.     From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.     From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.      2013 Direct Sales Amounts (Per Accum. Summary Reports for '13) Company-Wide         31% 1,658,066,825 Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.     From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:           OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone.          Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.           Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.            BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit    Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    RE: TracFone Audit Questions Inbox  Nicholas Ford <nford@tracfone.com> To:TRS Mon, Oct 10, 2016 at 12:12 PM   Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas, Hope all is well with you. Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us. Let us know if you have any questions. Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21% (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24% (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31% (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:           OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone.          Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.           Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.            BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services  which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.  Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Mon, Oct 10, 2016 at 12:23 PM Hi Nicholas, Thanks for the information.  We will let you know if we have any questions. Have a great afternoon. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions   Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas, Hope all is well with you. Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us. Let us know if you have any questions. Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you—as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audit s.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:           OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone.          Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.           Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.            BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.   Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Mon, Oct 17, 2016 at 2:12 PM Hi Nicholas, Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements. But here are some outstanding questions:  -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th? Thanks, Nicholas. We really appreciate all your work on this. Have a great afternoon. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions   Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas, Hope all is well with you. Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us. Let us know if you have any questions. Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide                                                                 2,144,494,356 31% (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses     From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14)Company-Wide         35% 2,144,494,356 Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:           OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone.          Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.           Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.            BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.  TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Fri, Oct 28, 2016 at 5:14 PM Hi Nicholas, Just checking to see if you have had a chance to look at the email below. Let us know if you have any questions. Thanks Nicholas. Have a great weekend. 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.  ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions Hi Nicholas, Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements. But here are some outstanding questions:  -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th? Thanks, Nicholas. We really appreciate all your work on this. Have a great afternoon. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions   Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas, Hope all is well with you. Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us. Let us know if you have any questions. Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you—as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage = 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide                                                                 1,164,915,001 (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage = 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage = 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage = 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage =   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69% 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.                             Nicholas Ford nford@tracfone.com Edit contact You and Nicholas Ford appeared together on 365 messages between July 2018 and Feb 2021. There were no messages from last week and on average 0.6 messages per week for last year.  RE: TracFone Audit Questions Inbox  Nicholas Ford <nford@tracfone.com> To:TRS Tue, Nov 1, 2016 at 3:04 PM   Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas, Just checking to see if you have had a chance to look at the email below. Let us know if you have any questions. Thanks Nicholas. Have a great weekend. 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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21% (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide                                                                 1,164,915,001 24% (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31% (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.  Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Wed, Nov 2, 2016 at 2:24 PM Hi Nicolas, We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.  We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.  -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.  One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was  actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit. We hope everything has been going well with you. Thanks Nicolas. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions   Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas, Just checking to see if you have had a chance to look at the email below. Let us know if you have any questions. Thanks Nicholas. Have a great weekend. 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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one- time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Wed, Nov 2, 2016 at 2:24 PM Hi Nicolas, We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.  We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.  -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.  One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was  actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit. We hope everything has been going well with you. Thanks Nicolas. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions   Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas, Just checking to see if you have had a chance to look at the email below. Let us know if you have any questions. Thanks Nicholas. Have a great weekend. 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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one- time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Wed, Nov 2, 2016 at 2:24 PM Hi Nicolas, We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.  We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.  -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.  One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was  actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit. We hope everything has been going well with you. Thanks Nicolas. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions   Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas, Just checking to see if you have had a chance to look at the email below. Let us know if you have any questions. Thanks Nicholas. Have a great weekend. 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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one- time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.                                    RE: TracFone Audit Questions Inbox Nicholas Ford <nford@tracfone.com> To:TRS Fri, Nov 4, 2016 at 1:51 PM Hi Mike – I do intend to answer your questions and hope to complete my review of them some time next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com]  Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas, We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was  actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions   Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas, Just checking to see if you have had a chance to look at the email below. Let us know if you have any questions. Thanks Nicholas. Have a great weekend. 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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Retail Sales Amounts? Included in Net Airtime Revenue Figures? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21% (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one- time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,     Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.   Re: TracFone Audit Questions Sent TRS <crisp@trs-integrity.com> To:Nicholas Ford Fri, Nov 4, 2016 at 2:11 PM Thanks Nicholas.  That sounds great.  We really appreciate all of you help with this audit. Have a great weekend. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com>  Sent: Friday, November 4, 2016 1:51 PM Subject: RE: TracFone Audit Questions Hi Mike – I do intend to answer your questions and hope to complete my review of them some time next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com]  Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas, We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was  actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions   Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas, Just checking to see if you have had a chance to look at the email below. Let us know if you have any questions. Thanks Nicholas. Have a great weekend. 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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide                                                                 2,144,494,356 31% (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.      Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one- time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,     Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Tue, Nov 15, 2016 at 12:23 PM HI Nicholas, Just checking to see how things are coming along with the questions below (11/2). Let us know if you have any questions. Thanks Nicholas. Have a great afternoon. 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.  ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, November 4, 2016 2:11 PM Subject: Re: TracFone Audit Questions Thanks Nicholas.  That sounds great.  We really appreciate all of you help with this audit. Have a great weekend. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, November 4, 2016 1:51 PM Subject: RE: TracFone Audit Questions Hi Mike – I do intend to answer your questions and hope to complete my review of them some time next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas, We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was  actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it. I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment -- initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it. Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.                                                                                         Nicholas Ford nford@tracfone.com Edit contact You and Nicholas Ford appeared together on 365 messages between July 2018 and Feb 2021. There were no messages from last week and on average 0.6 messages per week for last year. RE: TracFone Audit Questions Inbox  Nicholas Ford <nford@tracfone.com> To:TRS Wed, Nov 16, 2016 at 10:51 AM   Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas, We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21% (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24% (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31% (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it. Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge. After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs- integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.     Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Wed, Nov 16, 2016 at 12:41 PM Hi Philip, Thanks for the information.  We will let you know if we have any questions. Have a great afternoon. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 10:51 AM Subject: RE: TracFone Audit Questions   Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas, We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was  actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.      Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Wed, Nov 16, 2016 at 1:43 PM Hi Nicholas, Thanks again for sending us the email.  So regarding your answers, we will try to extract what you mean on the questions we sent most recently, and put our best understanding of your answers in bold: -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th. So we understand that you are saying that the chart does refer to company-wide figures. -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. Here, we understand that you would be as okay with us using the accessory-inclusive numbers as the not accessory-inclusive numbers for our estimate. -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information. Your data is still coming on this one.   One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. You have not responded to this one. You did not say, but we assume that your data is still coming on this one, as well.   So Nicholas, if you do not dispute our answers in these understandings in bold above, then we will take that as a positive agreement on each item above for which you did not send us a correction.   This is a complicated audit, and we do appreciate all the work you are doing to help move this forward. We are looking forward to your data on the last two items. Have a great day. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 10:51 AM Subject: RE: TracFone Audit Questions   Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas, We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14)Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it. I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.  RE: TracFone Audit Questions Inbox  Nicholas Ford <nford@tracfone.com> To:TRS Wed, Nov 16, 2016 at 2:04 PM Hi Mike – for purposes of your estimate calculation, the accessory-inclusive numbers should not be used, with the logic being that such accessories are not subject to tax under the utility tax statutes of the WA cities under audit.  As such, the accessory-exclusive number should be used.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 16, 2016 4:44 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks again for sending us the email.  So regarding your answers, we will try to extract what you mean on the questions we sent most recently, and put our best understanding of your answers in bold: -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th. So we understand that you are saying that the chart does refer to company-wide figures. -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. Here, we understand that you would be as okay with us using the accessory-inclusive numbers as the not accessory-inclusive numbers for our estimate. -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information. Your data is still coming on this one.   One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. You have not responded to this one. You did not say, but we assume that your data is still coming on this one, as well.   So Nicholas, if you do not dispute our answers in these understandings in bold above, then we will take that as a positive agreement on each item above for which you did not send us a correction.     This is a complicated audit, and we do appreciate all the work you are doing to help move this forward. We are looking forward to your data on the last two items.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 10:51 AM Subject: RE: TracFone Audit Questions     Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas,   We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21% (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide                                                                 1,164,915,001 24% (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31% (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs- integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs- integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Wed, Nov 16, 2016 at 2:38 PM Thanks, Nicholas. But were we both discussing the company-wide figures when you sent this response?  We understand that, when using the city-specific data you sent, we would not include the accessories which were broken out for us.  However, here we are merely trying to find a ratio of direct sales verses indirect sales using the company-wide data. Remember we got an accessories-inclusive figure for both, but only one accessories-exclusive number. In order to compare like figures, we will need to either use the two accessory-inclusive figures, or we will need the other accessory-exclusive figure for our use. This would be for each year of the chart sent on August 26. So would you like to provide for us the missing accessory-exclusive company-wide figures, or would you rather we just use the accessory-inclusive figures for estimating the ratio? Thanks again, Nicholas, for all of your help. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 2:04 PM Subject: RE: TracFone Audit Questions Hi Mike – for purposes of your estimate calculation, the accessory-inclusive numbers should not be used, with the logic being that such accessories are not subject to tax under the utility tax statutes of the WA cities under audit.  As such, the accessory-exclusive number should be used.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 16, 2016 4:44 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks again for sending us the email.  So regarding your answers, we will try to extract what you mean on the questions we sent most recently, and put our best understanding of your answers in bold: -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th. So we understand that you are saying that the chart does refer to company-wide figures. -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. Here, we understand that you would be as okay with us using the accessory-inclusive numbers as the not accessory-inclusive numbers for our estimate. -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information. Your data is still coming on this one.   One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. You have not responded to this one. You did not say, but we assume that your data is still coming on this one, as well.   So Nicholas, if you do not dispute our answers in these understandings in bold above, then we will take that as a positive agreement on each item above for which you did not send us a correction.     This is a complicated audit, and we do appreciate all the work you are doing to help move this forward. We are looking forward to your data on the last two items.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 10:51 AM Subject: RE: TracFone Audit Questions     Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas,   We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21% (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                  3,814,576,000   Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24% (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it. I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    RE: TracFone Audit Questions Inbox  Nicholas Ford <nford@tracfone.com> To:TRS Wed, Nov 16, 2016 at 2:42 PM Hi Mike – pardon the mix up.  On the company-wide ratio side of things you would be correct to use the accessory-inclusive figures as discussed. Just wanted to ensure that on the city-specific-data side of things that the accessories would not be included since they are not taxable as you know.    From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 16, 2016 5:39 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Thanks, Nicholas. But were we both discussing the company-wide figures when you sent this response?    We understand that, when using the city-specific data you sent, we would not include the accessories which were broken out for us.    However, here we are merely trying to find a ratio of direct sales verses indirect sales using the company-wide data. Remember we got an accessories-inclusive figure for both, but only one accessories-exclusive number. In order to compare like figures, we will need to either use the two accessory-inclusive figures, or we will need the other accessory-exclusive figure for our use. This would be for each year of the chart sent on August 26.   So would you like to provide for us the missing accessory-exclusive company-wide figures, or would you rather we just use the accessory-inclusive figures for estimating the ratio?   Thanks again, Nicholas, for all of your help.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 2:04 PM Subject: RE: TracFone Audit Questions   Hi Mike – for purposes of your estimate calculation, the accessory-inclusive numbers should not be used, with the logic being that such accessories are not subject to tax under the utility tax statutes of the WA cities under audit.  As such, the accessory-exclusive number should be used.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 16, 2016 4:44 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks again for sending us the email.    So regarding your answers, we will try to extract what you mean on the questions we sent most recently, and put our best understanding of your answers in bold:   -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th. So we understand that you are saying that the chart does refer to company-wide figures. -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. Here, we understand that you would be as okay with us using the accessory-inclusive numbers as the not accessory-inclusive numbers for our estimate. -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information. Your data is still coming on this one.   One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. You have not responded to this one. You did not say, but we assume that your data is still coming on this one, as well.   So Nicholas, if you do not dispute our answers in these understandings in bold above, then we will take that as a positive agreement on each item above for which you did not send us a correction.     This is a complicated audit, and we do appreciate all the work you are doing to help move this forward. We are looking forward to your data on the last two items.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 10:51 AM Subject: RE: TracFone Audit Questions     Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas,   We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide 21%                                                                           793,674,906 (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                  3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24% (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31% (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                 6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs- integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs- integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Wed, Nov 16, 2016 at 2:46 PM Thanks Nicholas. Sounds good. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 2:42 PM Subject: RE: TracFone Audit Questions Hi Mike – pardon the mix up.  On the company-wide ratio side of things you would be correct to use the accessory-inclusive figures as discussed. Just wanted to ensure that on the city-specific-data side of things that the accessories would not be included since they are not taxable as you know.    From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 16, 2016 5:39 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Thanks, Nicholas. But were we both discussing the company-wide figures when you sent this response?    We understand that, when using the city-specific data you sent, we would not include the accessories which were broken out for us.    However, here we are merely trying to find a ratio of direct sales verses indirect sales using the company-wide data. Remember we got an accessories-inclusive figure for both, but only one accessories-exclusive number. In order to compare like figures, we will need to either use the two accessory-inclusive figures, or we will need the other accessory-exclusive figure for our use. This would be for each year of the chart sent on August 26.   So would you like to provide for us the missing accessory-exclusive company-wide figures, or would you rather we just use the accessory-inclusive figures for estimating the ratio?   Thanks again, Nicholas, for all of your help.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 2:04 PM Subject: RE: TracFone Audit Questions   Hi Mike – for purposes of your estimate calculation, the accessory-inclusive numbers should not be used, with the logic being that such accessories are not subject to tax under the utility tax statutes of the WA cities under audit.  As such, the accessory-exclusive number should be used.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 16, 2016 4:44 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks again for sending us the email.    So regarding your answers, we will try to extract what you mean on the questions we sent most recently, and put our best understanding of your answers in bold:   -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th. So we understand that you are saying that the chart does refer to company-wide figures. -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. Here, we understand that you would be as okay with us using the accessory-inclusive numbers as the not accessory-inclusive numbers for our estimate. -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information. Your data is still coming on this one.   One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. You have not responded to this one. You did not say, but we assume that your data is still coming on this one, as well.   So Nicholas, if you do not dispute our answers in these understandings in bold above, then we will take that as a positive agreement on each item above for which you did not send us a correction.     This is a complicated audit, and we do appreciate all the work you are doing to help move this forward. We are looking forward to your data on the last two items.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 10:51 AM Subject: RE: TracFone Audit Questions     Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas,   We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide 21%                                                                           793,674,906 (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                  3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it. I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.      RE: TracFone Audit Questions Inbox  Nicholas Ford <nford@tracfone.com> To:TRS Fri, Dec 2, 2016 at 1:58 PM   Hi Mike – please see chart below in response to your question:   “One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.”     Year 2010 2011 2012 2013 2014 Data Percentage 3.96%18.65%25.08%38.42%41.77%     Note that I am also still working on providing you with information on the breakout of intrastate and interstate.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 16, 2016 4:44 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks again for sending us the email.    So regarding your answers, we will try to extract what you mean on the questions we sent most recently, and put our best understanding of your answers in bold:   -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th. So we understand that you are saying that the chart does refer to company-wide figures. -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. Here, we understand that you would be as okay with us using the accessory-inclusive numbers as the not accessory-inclusive numbers for our estimate. -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information. Your data is still coming on this one.   One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. You have not responded to this one. You did not say, but we assume that your data is still coming on this one, as well.   So Nicholas, if you do not dispute our answers in these understandings in bold above, then we will take that as a positive agreement on each item above for which you did not send us a correction.     This is a complicated audit, and we do appreciate all the work you are doing to help move this forward. We are looking forward to your data on the last two items.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 10:51 AM Subject: RE: TracFone Audit Questions     Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas,   We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide                                                                           21% 793,674,906 (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24% (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones)Company-Wide                                                                 2,144,494,356 31% (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com ] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs- integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs- integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.   Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Fri, Dec 2, 2016 at 2:50 PM Thanks Nicholas for the email.  We will take a look at it and will let you know if we have any questions. Also, how is the Statute of Limitations Waiver Form coming along? Have a great weekend. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, December 2, 2016 1:58 PM Subject: RE: TracFone Audit Questions   Hi Mike – please see chart below in response to your question:   “One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was  actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.”     Year 2010 2011 2012 2013 2014 Data Percentage 3.96%18.65%25.08%38.42%41.77%     Note that I am also still working on providing you with information on the breakout of intrastate and interstate.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 16, 2016 4:44 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks again for sending us the email.    So regarding your answers, we will try to extract what you mean on the questions we sent most recently, and put our best understanding of your answers in bold:   -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th. So we understand that you are saying that the chart does refer to company-wide figures. -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. Here, we understand that you would be as okay with us using the accessory-inclusive numbers as the not accessory-inclusive numbers for our estimate. -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information. Your data is still coming on this one.   One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. You have not responded to this one. You did not say, but we assume that your data is still coming on this one, as well.   So Nicholas, if you do not dispute our answers in these understandings in bold above, then we will take that as a positive agreement on each item above for which you did not send us a correction.     This is a complicated audit, and we do appreciate all the work you are doing to help move this forward. We are looking forward to your data on the last two items.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 10:51 AM Subject: RE: TracFone Audit Questions     Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas,   We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21% (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.   Fw: TracFone Statute of Limitations Waiver Form Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Mon, Dec 5, 2016 at 2:33 PM Hi Nichols, Hope you had a great Thanksgiving. Also, wanted to check and see how the waiver form is coming along and also the percentages for intrastate verses interstate you were going to supply us with. Let us know if you have any questions. Thanks Nicholas. Have a great afternoon. 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.  ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Wednesday, November 23, 2016 12:58 PM Subject: TracFone Statute of Limitations Waiver Form Hi Nicholas, Hope every things is going well with you. We have been making good progress with the audits, but we will not be able to wrap up this audit until early next year.  I have attached the waiver form for Kennewick with this email for a signature by TracFone.  After you have signed it, we will send a copy to the various cities for their signature.  Please submit the waiver form by December 9, 2016. We will not need a waiver form for the City of Federal Way and Tukwila because they do not have a statute of limitations in their municipal code, and the other cities have estimated taxes holding them. Let us know if you have any questions. Also, let us know if you have any questions concerning the  additional information that we need for the audits.  Have a Happy Thanksgiving. Thanks Nicholas. 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.   Statute of Limitations Kennewick for year 2010, 2011 and 2012-TracFone.doc 15kB   RE: TracFone Audit Questions Inbox  Nicholas Ford <nford@tracfone.com> To:TRS Wed, Dec 7, 2016 at 8:49 AM   Hi Mike – please see chart below in response to your question:  provide information on breakout of intrastate and interstate   Year 2009 2010 2011 2012 2013 2014 Intrastate Percentage 84.07%85.73%83.97%83.38%81.09%79.33% Interstate Percentage 15.39%14.11%15.58%15.68%17.17%19.33% International Percentage 0.54%0.16%0.45%0.94%1.74%1.34% Total:100.00%100.00%100.00%100.00%100.00%100.00%   Note that the Kennewick statute waiver form you provided is still under review.   Thanks,     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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, December 02, 2016 5:50 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Thanks Nicholas for the email.  We will take a look at it and will let you know if we have any questions.   Also, how is the Statute of Limitations Waiver Form coming along?   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, December 2, 2016 1:58 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see chart below in response to your question:   “One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.”     Year 2010 2011 2012 2013 2014 Data Percentage 3.96%18.65%25.08%38.42%41.77%     Note that I am also still working on providing you with information on the breakout of intrastate and interstate.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 16, 2016 4:44 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks again for sending us the email.    So regarding your answers, we will try to extract what you mean on the questions we sent most recently, and put our best understanding of your answers in bold:   -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th. So we understand that you are saying that the chart does refer to company-wide figures. -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. Here, we understand that you would be as okay with us using the accessory-inclusive numbers as the not accessory-inclusive numbers for our estimate. -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information. Your data is still coming on this one.   One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. You have not responded to this one. You did not say, but we assume that your data is still coming on this one, as well.   So Nicholas, if you do not dispute our answers in these understandings in bold above, then we will take that as a positive agreement on each item above for which you did not send us a correction.     This is a complicated audit, and we do appreciate all the work you are doing to help move this forward. We are looking forward to your data on the last two items.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 10:51 AM Subject: RE: TracFone Audit Questions     Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas,   We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                  2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21% (2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24% (2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31% (2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33% (2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13)Company-Wide         1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company-Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company-Wide         2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company-Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas, Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.      Re: TracFone Audit Questions Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Wed, Dec 7, 2016 at 2:17 PM Thanks Nicholas.  We should be able to move forward with the audit and come up with an estimate.  We will let you know if we have any other questions. Thanks Nicholas. Have a great afternoon. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, December 7, 2016 8:48 AM Subject: RE: TracFone Audit Questions   Hi Mike – please see chart below in response to your question:  provide information on breakout of intrastate and interstate   Year 2009 2010 2011 2012 2013 2014 Intrastate Percentage 84.07%85.73%83.97%83.38%81.09%79.33% Interstate Percentage 15.39%14.11%15.58%15.68%17.17%19.33% International Percentage 0.54%0.16%0.45%0.94%1.74%1.34% Total:100.00%100.00%100.00%100.00%100.00%100.00%   Note that the Kennewick statute waiver form you provided is still under review.   Thanks,     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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, December 02, 2016 5:50 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Thanks Nicholas for the email.  We will take a look at it and will let you know if we have any questions.   Also, how is the Statute of Limitations Waiver Form coming along?   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, December 2, 2016 1:58 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see chart below in response to your question:   “One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was  actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.”     Year 2010 2011 2012 2013 2014 Data Percentage 3.96%18.65%25.08%38.42%41.77%     Note that I am also still working on providing you with information on the breakout of intrastate and interstate.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 16, 2016 4:44 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks again for sending us the email.    So regarding your answers, we will try to extract what you mean on the questions we sent most recently, and put our best understanding of your answers in bold:   -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th. So we understand that you are saying that the chart does refer to company-wide figures. -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. Here, we understand that you would be as okay with us using the accessory-inclusive numbers as the not accessory-inclusive numbers for our estimate. -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information. Your data is still coming on this one.   One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate. You have not responded to this one. You did not say, but we assume that your data is still coming on this one, as well.   So Nicholas, if you do not dispute our answers in these understandings in bold above, then we will take that as a positive agreement on each item above for which you did not send us a correction.     This is a complicated audit, and we do appreciate all the work you are doing to help move this forward. We are looking forward to your data on the last two items.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, November 16, 2016 10:51 AM Subject: RE: TracFone Audit Questions     Hi Mike – in regard to your outstanding questions, I had actually answered them on October 10, 2016 via a reply e-mail.  I’m copying and pasting them, along with my previously stated responses, below for your convenience:   Your Comment/Question:  In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  My response:  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  My response:  Yes.   Your Comment/Question:  If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  My response:  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  My response:  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No   Your Added Comment/Question from 11/2/16:  If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent. My response:  in hindsight, I could have subtracted but added instead.   Your Added Comment/Question from 11/2/16:  Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.   I am working on this item and expect to have the breakout data for you soon.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, November 02, 2016 5:24 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions   Hi Nicolas,   We do understand that you would like to meet with us, but as we mentioned in the past, we would need to complete the audit first and then we could talk about meeting with your attorney and with legal representatives from the cities.  As you know, the city statutes require that you open your books for tax audits, and we simply just want to first obtain the rest of the information that we need to complete the audit.    We are down to just the three questions on the email below. Are there any of them that you will be unable to answer? Please send us whatever answers you can.    -We are sure that you can answer the one asking if you can verify for us that the answers in the chart below (October 10) refer to the company-wide figures supplied to us on August 26th.  -If you don't want to explain why you added phones to one amount rather than subtracted phones from the other, we can certainly estimate this with the numbers you sent.  -Regarding the first question, if you choose not to provide information on breakout of intrastate and interstate, since bundles are taxable when not broken out in the regular course of business, we can just go ahead and do the audit without this information.    One more question is also outstanding. We had thought, earlier in the audit, that your company was breaking out your data-related revenues because of the data you sent titled "internet." Now we realize that this amount was actually revenue figures for sales made by your company online, not data service. So it would be great if we could get percentages from you regarding data sold to customers, so that this may be factored into our estimate.   If you can let us know if you intend to answer these questions, we will know whether to continue to wait on your answers or if we should move forward with the audit.   We hope everything has been going well with you. Thanks Nicolas.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, November 1, 2016 3:04 PM Subject: RE: TracFone Audit Questions     Hi Mike – in aiming to more efficiently bring your ongoing tax audits of TracFone to a mutual resolution, we need to have a meeting as per our several previous requests.   We would be glad to respond in-person to all of your questions, including your most recent set contained in your 10/17/2016 e-mail to us as shown below.  Please advise accordingly.   Regards,   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.                From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 28, 2016 8:14 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Just checking to see if you have had a chance to look at the email below.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Monday, October 17, 2016 2:12 PM Subject: Re: TracFone Audit Questions   Hi Nicholas,   Thanks for the chart below. Assuming that the answers you provided are for the company-wide date figures, it does look as though we are pretty much comparing like numbers; we know the Safelink program represents a tiny proportion of revenues, and other than that, the figures contain the same elements.   But here are some outstanding questions:    -You told us in an earlier email that phones could be broken out of the conglomerate numbers you sent. Why did you add phones in one rather than removing them from the other? How difficult would that be to convert these to non-accessary numbers? That would be a bit more accurate, but for estimation purposes, we could also assume that the percentages would be the same for both. -Have you any more information on how to break out intrastate and interstate calls? -Can you verify for us that the answers in the chart below (October 10) refer to the company- wide figures supplied to us on August 26th?   Thanks, Nicholas. We really appreciate all your work on this.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Monday, October 10, 2016 12:12 PM Subject: RE: TracFone Audit Questions     Hi Mike – please see responses inserted below in blue font.   After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?),  Yes, the retail direct figures in the schedule grid below include phones and accessories sales and yes those sales can be broken out. and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?  Yes.   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th?  See table grid below.  I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."  See table grid below.      Account Included in Net Airtime Revenue Figures? Included in Retail Sales Amounts? 6102 – Airtime Revenue Yes Yes 6112 – Revenue – TF Service Protection Yes Yes 6113 – Revenue – Monthly Program Yes Yes 6118 – Revenue – Safelink Program Yes No 6202 – BYOP Revenue Yes Yes 6303 – Revenue – Other No No 6305 – Revenue – ILD Cards Yes Yes 6306 – Mobile Advertising Revenue Share No No 6308 – Revenue – Advertising No No     Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, October 07, 2016 5:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nicholas,   Hope all is well with you.   Also, just checking to see if you have had a chance to take a look at the email below and how things are coming along with the other information that you were going to send us.   Let us know if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, September 30, 2016 3:50 PM Subject: Re: TracFone Audit Questions   Hi Nicolas,   Thanks for the response.  But the question we were asking was regarding the schedule you sent detailing the company-wide data and calculated percents (not the city-specific data). Could you take another look at the question in reference to the company-wide data on the schedule that you sent to us?    Thanks Nicolas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, September 30, 2016 1:52 PM Subject: RE: TracFone Audit Questions     Hi Mike – here is an in part response below to your audit questions referenced in your latest e-mail:   Your Question:  “In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?)”  Response:   Yes, the retail sales amounts contain phone and accessory revenue and they were broken out in separate files for each of the cities under audit—i.e., ‘telephone sales’.   You had received those files some time ago in separate e-mails.  For example, containing individual files for Billing Platform Sales, Internet Sales, and Telephone Sales.   *I expect to respond to the rest of your questions once my V.P. of Tax completes his review of the answers I’ve drafted and submitted to him.*   Thanks,   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.      From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, September 23, 2016 4:53 PM To: Nicholas Ford Subject: TracFone Audit Questions   Hi Nichols,   Just checking to see if you have had a chance to take a look at our questions below.   Thanks Nicholas.   Have a great weekend.   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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, September 7, 2016 2:09 PM Subject: RE: TracFone Audit Questions - Responses   Hello Mike – I’ll be out of the office beginning tomorrow (9/8) and returning on Monday (9/12), at which time I can take a closer look at your questions below.   Thanks,     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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, September 07, 2016 4:49 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope you had a great holiday weekend.   Thanks for all of the information sent August 26. After studying the figures, we have some questions. In the schedule grid below, and in your explanation, are we correct in understanding that the 'retail direct' figures contain phone and accessory revenue, but since these cannot be broken out (or can they?), and since the net airtime revenue did not contain phones and accessories, you found the total phone and accessory revenue and added that into the net airtime figures, then you used this sum to come up with the percentages?   If so, this is very helpful. Now, looking at the chart you sent to us on August 17 (copied below), I am wondering how close we have come in comparing like figures to come up with percentages. Which of the revenue code categories below are included in the the Airtime revenue values you sent August 26th? And which are included in the Retail Direct revenue values sent August 26th? I know the retail direct section is labeled "airtime and phones," but, for example, there is airtime in the monthly program, but only Category 6102 is named "Airtime Revenue."   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year— are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free-of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.       6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Also, you stated that you have the ability to break out the interstate information. At what level(s) can you do this, city, state, national or company-wide?    Thanks Nicolas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 26, 2016 10:35 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – in regard to your remaining questions, please see responses below.  As far as I can tell, in providing the information below there are no outstanding questions and/or requests for other information.  Assuming that’s the case, we are asking once again for an opportunity to meet with you— as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city audits with the aim of bringing them to a resolution.  If you would, please provide some timeframes in the near future that would be convenient for you for purposes of sitting down with us to discuss your audits.  For example, October 2016 would work for us, with the exception of October 6th.   1) Your Question:  If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%. Ø   Response:  The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale was just that—an estimate.  It was also based on the whole company as opposed to a particular state or city.  The net airtime revenue (per financial statements) denominator includes not only retail sales, but also wholesale sales.    2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain? Ø  Response:  In addition to the net airtime revenue (per financial statements) denominator, the grid below now shows a separate break-out of sales of phones & accessories sales.  The retail sales amounts (numerator) that were provided to you also include both phones & accessories sales and internet.    3) Your Question:  We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than  the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Ø  Response:  See information in schedule grid below, which serves as a basis for the estimated wholesale percentages shown.    2010 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           486,626,850 17% (2) Net Airtime Revenue (Per Financial Statements)                                  2,457,761,508 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             341,243,35 1 Total (2) + (3):                                 2,799,004,859  Company-Wide 1 minus Retail Percentage = 83% 2011 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                           793,674,906 21%(2) Net Airtime Revenue (Per Financial Statements)                                  3,433,624,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             380,952,00 0 Total (2) + (3):                                 3,814,576,000  Company-Wide 1 - Retail Percentage =79% 2012 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,164,915,001 24%(2) Net Airtime Revenue (Per Financial Statements)                                  4,291,440,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             502,534,00 0 Total (2) + (3):                                 4,793,974,000  Company-Wide 1 - Retail Percentage =76% 2013 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 1,658,066,825 27% (2) Net Airtime Revenue (Per Financial Statements)                                  5,358,599,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             676,091,00 0 Total (2) + (3):                                 6,034,690,000  Company-Wide 1 - Retail Percentage =73% 2014 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,144,494,356 31%(2) Net Airtime Revenue (Per Financial Statements)                                  6,126,893,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             694,099,00 0 Total (2) + (3):                                 6,820,992,000  Company-Wide 1 - Retail Percentage =69% 2015 (1) Retail (Direct) Sales Amounts (Airtime & Phones) Company-Wide                                                                 2,330,936,554 33%(2) Net Airtime Revenue (Per Financial Statements)                                  6,279,204,000 (3) Net Phones & Accessories Revenue (Per Financial Statements)                                                                             699,462,00 0 Total (2) + (3):                                  6,978,666,000  Company-Wide 1 - Retail Percentage = 67%   4) Your Question:  We need to know if you would be able to break out the interstate amounts for the long-distance charges. Ø  Response:  we have the ability to identify interstate amounts for total calling activity.      Thanks,   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.         From: TRS [mailto:crisp@trs-integrity.com] Sent: Wednesday, August 17, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Thanks Nicholas.  We will review the information that you sent to us and we will let you know if we have any questions.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, August 17, 2016 11:12 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see below responses regarding your chart of accounts related questions.  Please be aware that I should have feedback related to your questions on the retail sales, wholesale sales and airtime revenue (where I had sent you some roughly estimated percentage amounts) next week sometime.     Account Number(s)                                                   Description   6102                                                    Airtime Revenue Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the “Pay as you go” or “PayGo” Airtime coverage, whereby minutes and days of service can be added as according to a customer’s needs.  Includes retail and wholesale sales (to retailers).   6112                                                    Revenue - TF Service Protection Ø  Sales of TF service protection plans, whereby customers can enroll and protect their service by receiving a 30-day service only extension if needed and add any airtime cards or minutes.   6113                                                    Revenue - Monthly Program Ø  Sales of prepaid wireless service (airtime) of voice, data (internet), and texting under the monthly plans program.  For example, monthly plans of varying periods—of up to one year—are offered.   6118                                                    Revenue - Safelink Program Ø  The Lifeline service (“Safelink”) is a program that enables low-income households to afford phone service.  In the Safelink (Lifeline) Program, TracFone gives airtime (minutes) service free- of-charge to eligible, low-income participants.  In turn, TracFone receives payments, which are reimbursements by USAC for TracFone’s participation in the Safelink program.   6202                                                    BYOP Revenue Ø  Sales of TracFone BYOP packages, which include the BYOP SIM card.  BYOP stands for Bring Your Own Phone. With TracFone's Bring Your Own Phone program, a customer can get TracFone service on their current phone.      6303                                                    Revenue – Other Ø  Miscellaneous Revenue not related to operating activity.   6305                                                    Revenue - ILD Cards Ø  Sales of international long distance (“ILD”) prepaid wireless service (airtime) of voice, data (internet), and texting.   ILD makes it easy for wireless customers to make international calls.   6306                                                    Mobile Advertising Revenue Share Ø  Tracfone owns an inventory of “spaces” that its sells to ad networks (ad resellers). TracFone’s subscribers will see ads from several companies in apps, and then the ad networks will pay Tracfone for the use of these “spaces”.     6308                                                    Revenue - Advertising Ø  See 6306 above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, August 15, 2016 3:46 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nichols,   Hope things are going well with you and that things are starting to slow down.   Also, wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, August 5, 2016 7:35 AM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – we’re just wrapping up our month end closing.  I had prepared a draft of responses to your questions and will circle back to my contact today, who was reviewing.   Thanks for your patience,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Thursday, August 04, 2016 6:02 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Just checking to see how things are coming along with the information that we requested on June 30th and April 29th.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, July 28, 2016 5:00 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope all is well with you.   I also wanted to check and see how things are coming along with the information that we requested for the audit.   Let us know if you have any questions.   Thanks Nicholas.   Have a great day.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, July 19, 2016 2:40 PM Subject: RE: TracFone Audit Questions - Responses   Hi Mike – just a heads up that I’ve been working on your questions, however the Head of Tax and myself will be out of the office the rest of this week until Monday.  As such, I’d aim to get feedback to you sometime next week.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, July 12, 2016 5:08 PM To: Nicholas Ford Subject: Fw: TracFone Audit Questions - Responses   Hi Nicholas,   Looking at our June 30 email below, we noticed that we made a typo of sorts. In item (3), we put the word "without," when we actually meant "with." Hopefully, from context, you caught our intended meaning and have been framing your reply accordingly, but just in case, we wanted to clarify.    Let us know if you have any questions.   Have a great day.   Thanks Nicholas.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Friday, July 8, 2016 2:01 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Hope everything is going great for you.   Also, wanted to check and see how things are coming along with the email below and if you have any questions.   Thanks Nicholas.   Have a great weekend.   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.    From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Thursday, June 30, 2016 4:08 PM Subject: Re: TracFone Audit Questions - Responses   Hi Nicolas,   Thanks for the information you sent. It is very helpful for us to understand the terminology used inside your company.   Regarding the calculations you sent us to back up the 30%, this is a good start, but we do have a few further questions.    1) If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum. Using this method, we arrive at 23.6% and 25.9%.   2) You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what components they contain?   3) We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent years.  Could you send us this information?   Also, let us know if you have any questions concerning the April 29th email that we sent to you.   Thanks Nichols for all of your help.   Have a great 4th of July weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Tuesday, June 28, 2016 12:25 PM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses below to your questions (per your 6/24 e-mail):   (1)   What is Internet (APP)?   Ø  The Alternative Payment Plan (“APP”) is TracFone’s credit card transaction interface for retail sales.  Under the APP, customers engage in one-time credit card based transactions via the internet or phone.   APP based customer transactions are consummated predominantly via the internet.  Furthermore, any TracFone plan program which is not available to be set up for an automated-recurring charge gets processed through APP.    (2)    What is Billing Platform?   Ø  The Billing Platform (“BP”) is a supplement to the Alternative Payment Plan (“APP”) to provide a system for automated-recurring charges.  Customers can make a one-time purchase or enroll into programs available for automated or recurring charges, most of which include airtime on a monthly (30 day) basis.    Based on the above, both APP and Billing Platform are internet-based credit card transaction interfaces for executing TracFone’s customers’ retail purchases—except that Billing Platform provides for recurring charges whereas APP allows customers to engaged in one-time credit card transactions.   (3)      Retail Sales Comprise Roughly 30% of TracFone’s sales.     Below shows the breakdown for 2013 and 2014, for example.     2013 Direct Sales Amounts (Per Accum. Summary Reports for '13) Company- Wide      1,658,066,825 31% Airtime Revenue (Per Financial Statements) Company- Wide      5,358,559,000 69%Wholesale Sales Percentage 2014 Direct Sales Amounts (Per Accum. Summary Reports for '14) Company- Wide      2,144,494,356 35% Airtime Revenue (Per Financial Statements) Company- Wide      6,126,893,000 65%Wholesale Sales Percentage   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 24, 2016 4:35 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for your responses.  After reviewing your reports again we want to make sure we understand what each report is showing, so could you review with us the definition for each report below:   Platform report   APPT report   In other words, is the Billing Platform Report sales for website or phone sales or both?   And the APPT report sales would be for? The sheets say "internet," but we want to ascertain if this means that they were sales made over the internet, not sales of internet (data plans). Perhaps all of your sales are made in bundles, without breaking out data from telephone services?   In addition, do you have any back-up information for the 30 percent figure for your retail sales verses non-retail sales? We were wondering, as well, if this percent changed significantly over time?   Let us know, also, if you have any questions on the April 29 email.   Thanks Nicholas.   Have a great weekend.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 24, 2016 8:06 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see my responses to your questions below in bold blue font.   Thanks,   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.          From: TRS [mailto:crisp@trs-integrity.com] Sent: Tuesday, June 21, 2016 5:01 PM To: Nicholas Ford Subject: Re: TracFone Audit Questions - Responses   Hi Nicholas,   Thanks for the email, and all the clarification you provided. We do appreciate it.   I was reviewing your answers to our questions below, and I noticed that you omitted one of the questions, the one asking for a percentage of revenues that come from other stores:   ". . . could you tell us the percentage of your revenues that come from your stores versus the revenues that come from other stores?"  As indicated my original response, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.    Your answers below seem to indicate that both sales from other stores (which sales TracFone does not consider "retail"), and any recharges (or what TracFone calls "refills") associated with those sales, were not included in the figures you sent us. Please verify if this is the correct understanding.  Not correct:  TracFone does not own any stores.  Refills are retail sales of airtime.  As such, customers can purchase additional airtime (refills) via the internet (i.e., TracFone’s website), and over the phone.  Refills are included in the Billing Platform and Internet Sales retail sales summary reports/figures that I had sent to you.     So could you send us the percentage breakout between your sales at your Website and by phone (which we believe you call retail) and your other sales (non-"retail," including refills or what we call recharges on the non-retail sales)?   Retail sales comprise roughly 30% of TracFone’s sales.   Also, let me know if you have any questions concerning the email that we sent to you on April 29th, concerning other revenues that TracFone receives. Working on…   Have a great afternoon.   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.    From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Friday, June 17, 2016 8:34 AM Subject: RE: TracFone Audit Questions - Responses     Hi Mike – please see responses below to your questions.  *Please note that I am still reviewing your questions related to TracFone’s chart of accounts.*   Billing Platform Transaction Detail Report:  What is?:  ·         OTAPURCH -- ‘over the air’ purchase of prepaid wireless services (airtime) by a customer through the phone. ·         Enrollment --  initial (one-time) enrollment of a customer when purchasing airtime.  ·         Recurring -- using the Billing Platform, customers make a one-time purchase or enroll into programs available for recurring charges, most of which include airtime on a monthly (30 day) basis.   ·         BN Enrollment – ‘Buy Now-Airtime on Demand’ enrollment’, which allows customers to choose and buy Airtime directly from their TracFone, so that they can buy Airtime when they need it.   Also, does TracFone receive their revenues for features such as call waiting sold to their customers, or are they part of the plan when you sell your cards?   No, TracFone does not receive revenues for call waiting.  The feature is part of the airtime plan that customers purchase, thus it is not a separate charge.   After thinking about it, we had some other questions.  You mentioned below that the data that you provided to us does not include retailers such as Walmart.  So the revenue figures that you sent to us are for your own stores?  First off, TracFone is a reseller of prepaid wireless service (airtime) that neither owns any stores nor cellular facilities.  It should also be noted that TracFone does not earn revenue in Burien, Federal Way, Kennewick, Renton, Spokane, or Tukwila.   As such, the Billing Platform, Internet Sales, and Telephone Sales excel format reports that you received comprise TracFone’s retail sales amounts.  These amounts, which are all of the Company’s retail sales, are from customer purchases made via the internet (i.e., the TracFone’s website) and over the phone.     Recharges on Sales Made by Outside Stores Such as Walmart:   One more question we forgot to ask you: when you send us the revenue information that we asked about in the email below, could you also include the charges to customers who have continued to use your services (directly through your drawing funds from their credit card or bank account) after they bought a phone or calling card from one of your outside retailers (like Walmart)? We generally refer to these charges as "recharges." Or are these charges included in the figures you already sent?  Refills of airtime that a customer can purchase at retail via the internet (i.e., the TracFone’s website), and over the phone.  They are included in the Billing Platform and Internet Sales retail reports that you received.   Recharges on Sales Made by TracFone's Own Stores:   In addition, we will need to ascertain that all recharges done on accounts opened at your own stores are included somewhere in the information we are provided with, as well: are charges (associated with sales that initiated at one of your stores) for continued services which were completed by automatic withdrawals or telephone withdrawals included in the figures you sent to us? If not, we will need access to these numbers as well.   See response to question above.   Thanks,   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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, June 10, 2016 3:29 PM To: Nicholas Ford Subject: TracFone Audit   Hi Nicholas,   Hope everything is going well.   Also, just checking to see how things are coming along with the information that you told us you would send to us this week.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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. RE: TracFone Statute of Limitations Waiver Form Inbox  Nicholas Ford <nford@tracfone.com> To:TRS Thu, Dec 8, 2016 at 3:01 PM   Hi Mike – please find attached the signed Kennewick SOL waiver form.  You’ll notice that my V.P. of Tax has signed it through 3/31/2017.   We’re looking to sit down with just you at some point in the 1st quarter of 2017… even if possible to discuss a single city (e.g., Kennewick).  In our view, we feel that it is common practice for taxpayers and auditors to meet and chat during the course of an ongoing audit.   As such, let us know if you think you can be available to take a piece meal approach for a sit down …as opposed to chatting about all six cities under audit at once.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, December 05, 2016 5:33 PM To: Nicholas Ford Subject: Fw: TracFone Statute of Limitations Waiver Form   Hi Nichols,   Hope you had a great Thanksgiving.   Also, wanted to check and see how the waiver form is coming along and also the percentages for intrastate verses interstate you were going to supply us with.   Let us know if you have any questions. Thanks Nicholas.   Have a great afternoon.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Wednesday, November 23, 2016 12:58 PM Subject: TracFone Statute of Limitations Waiver Form   Hi Nicholas, Hope every things is going well with you.   We have been making good progress with the audits, but we will not be able to wrap up this audit until early next year.  I have attached the waiver form for Kennewick with this email for a signature by TracFone.  After you have signed it, we will send a copy to the various cities for their signature.  Please submit the waiver form by December 9, 2016. We will not need a waiver form for the City of Federal Way and Tukwila because they do not have a statute of limitations in their municipal code, and the other cities have estimated taxes holding them. Let us know if you have any questions. Also, let us know if you have any questions concerning the  additional information that we need for the audits.  Have a Happy Thanksgiving. Thanks Nicholas. 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.     20161208 - TracFone-Kennewick Audit - SOL Waiver.pdf 51.6kB Fw: TracFone Statute of Limitations Waiver Form Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Fri, Dec 9, 2016 at 1:45 PM Hi Nicholas, Thanks for the waiver.  At this point, we will be working on the information that you gave us and should be able to complete the audits in the first quarter of next year.  When we begin putting together the audit papers, there is still a small possibility that we will need to ask for more information, but we are hoping we will not need anything further. After we have reviewed the audits with the cities, we will then be ready to review the audits with you.  You suggested we could start with one city.  After everyone has reviewed the audits, we can then consider sitting down with you to review an audit with a city or cities.  We will let you know if we have any questions. Thanks Nicholas. Have a great weekend and a Merry Christmas. 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.  ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Thursday, December 8, 2016 3:01 PM Subject: RE: TracFone Statute of Limitations Waiver Form   Hi Mike – please find attached the signed Kennewick SOL waiver form.  You’ll notice that my V.P. of Tax has signed it through 3/31/2017.   We’re looking to sit down with just you at some point in the 1st quarter of 2017… even if possible to discuss a single city (e.g., Kennewick).  In our view, we feel that it is common practice for taxpayers and auditors to meet and chat during the course of an ongoing audit.   As such, let us know if you think you can be available to take a piece meal approach for a sit down …as opposed to chatting about all six cities under audit at once.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, December 05, 2016 5:33 PM To: Nicholas Ford Subject: Fw: TracFone Statute of Limitations Waiver Form   Hi Nichols,   Hope you had a great Thanksgiving.   Also, wanted to check and see how the waiver form is coming along and also the percentages for intrastate verses interstate you were going to supply us with.   Let us know if you have any questions. Thanks Nicholas.   Have a great afternoon.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Wednesday, November 23, 2016 12:58 PM Subject: TracFone Statute of Limitations Waiver Form   Hi Nicholas, Hope every things is going well with you.   We have been making good progress with the audits, but we will not be able to wrap up this audit until early next year.  I have attached the waiver form for Kennewick with this email for a signature by TracFone.  After you have signed it, we will send a copy to the various cities for their signature.  Please submit the waiver form by December 9, 2016. We will not need a waiver form for the City of Federal Way and Tukwila because they do not have a statute of limitations in their municipal code, and the other cities have estimated taxes holding them. Let us know if you have any questions. Also, let us know if you have any questions concerning the  additional information that we need for the audits.  Have a Happy Thanksgiving. Thanks Nicholas. 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.     20161208 - TracFone-Kennewick Audit - SOL Waiver.pdf RE: TracFone Statute of Limitations Waiver Form Inbox  Nicholas Ford <nford@tracfone.com> To:TRS Wed, Dec 14, 2016 at 1:17 PM   Hi Mike – in regard to your e-mail below, we would like to see your preliminary workpapers once you have completed your estimate(s) so that we can review on our end before you submit a final version to the cit ies.  If you’re able to do that, it would be greatly appreciated from our standpoint.   Thanks and Happy Holidays,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, December 09, 2016 4:46 PM To: Nicholas Ford Subject: Fw: TracFone Statute of Limitations Waiver Form   Hi Nicholas,   Thanks for the waiver.  At this point, we will be working on the information that you gave us and should be able to complete the audits in the first quarter of next year.  When we begin putting together the audit papers, there is still a small possibility that we will need to ask for more information, but we are hoping we will not need anything further.   After we have reviewed the audits with the cities, we will then be ready to review the audits with you.  You suggested we could start with one city.  After everyone has reviewed the audits, we can then consider sitting down with you to review an audit with a city or cities.  We will let you know if we have any questions. Thanks Nicholas. Have a great weekend and a Merry Christmas. 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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Thursday, December 8, 2016 3:01 PM Subject: RE: TracFone Statute of Limitations Waiver Form     Hi Mike – please find attached the signed Kennewick SOL waiver form.  You’ll notice that my V.P. of Tax has signed it through 3/31/2017.   We’re looking to sit down with just you at some point in the 1st quarter of 2017… even if possible to discuss a single city (e.g., Kennewick).  In our view, we feel that it is common practice for taxpayers and auditors to meet and chat during the course of an ongoing audit.   As such, let us know if you think you can be available to take a piece meal approach for a sit down …as opposed to chatting about all six cities under audit at once.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com ] Sent: Monday, December 05, 2016 5:33 PM To: Nicholas Ford Subject: Fw: TracFone Statute of Limitations Waiver Form   Hi Nichols,   Hope you had a great Thanksgiving.   Also, wanted to check and see how the waiver form is coming along and also the percentages for intrastate verses interstate you were going to supply us with.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.    ----- Forwarded Message ----- From: TRS <crisp@trs-integrity.com> To: Nicholas Ford <nford@tracfone.com> Sent: Wednesday, November 23, 2016 12:58 PM Subject: TracFone Statute of Limitations Waiver Form   Hi Nicholas,   Hope every things is going well with you.   We have been making good progress with the audits, but we will not be able to wrap up this audit until early next year.  I have attached the waiver form for Kennewick with this email for a signature by TracFone.  After you have signed it, we will send a copy to the various cities for their signature.  Please submit the waiver form by December 9, 2016.   We will not need a waiver form for the City of Federal Way and Tukwila because they do not have a statute of limitations in their municipal code, and the other cities have estimated taxes holding them.   Let us know if you have any questions.   Also, let us know if you have any questions concerning the  additional information that we need for the audits.    Have a Happy Thanksgiving.   Thanks Nicholas.   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.      Re: TracFone Statute of Limitations Waiver Form Sent  TRS <crisp@trs-integrity.com> To:Nicholas Ford Fri, Dec 16, 2016 at 2:36 PM Hi Nicholas, Yes, we plan to have you take a look at the preliminary workpapers before they are finalized. Things are starting to slow down now for the holidays and end-of-year deadlines, but we hope to have something back to you early in the new year. Hope you and yours have a Merry Christmas. Thanks Nicholas. 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.  From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Wednesday, December 14, 2016 1:17 PM Subject: RE: TracFone Statute of Limitations Waiver Form   Hi Mike – in regard to your e-mail below, we would like to see your preliminary workpapers once you have completed your estimate(s) so that we can review on our end before you submit a final version to the cities.  If you’re able to do that, it would be greatly appreciated from our standpoint.   Thanks and Happy Holidays,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Friday, December 09, 2016 4:46 PM To: Nicholas Ford Subject: Fw: TracFone Statute of Limitations Waiver Form   Hi Nicholas,   Thanks for the waiver.  At this point, we will be working on the information that you gave us and should be able to complete the audits in the first quarter of next year.  When we begin putting together the audit papers, there is still a small possibility that we will need to ask for more information, but we are hoping we will not need anything further.   After we have reviewed the audits with the cities, we will then be ready to review the audits with you.  You suggested we could start with one city.  After everyone has reviewed the audits, we can then consider sitting down with you to review an audit with a city or cities.  We will let you know if we have any questions. Thanks Nicholas. Have a great weekend and a Merry Christmas. 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.    ----- Forwarded Message ----- From: Nicholas Ford <nford@tracfone.com> To: TRS <crisp@trs-integrity.com> Sent: Thursday, December 8, 2016 3:01 PM Subject: RE: TracFone Statute of Limitations Waiver Form     Hi Mike – please find attached the signed Kennewick SOL waiver form.  You’ll notice that my V.P. of Tax has signed it through 3/31/2017.   We’re looking to sit down with just you at some point in the 1st quarter of 2017… even if possible to discuss a single city (e.g., Kennewick).  In our view, we feel that it is common practice for taxpayers and auditors to meet and chat during the course of an ongoing audit.   As such, let us know if you think you can be available to take a piece meal approach for a sit down …as opposed to chatting about all six cities under audit at once.   Thanks,     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.        From: TRS [mailto:crisp@trs-integrity.com] Sent: Monday, December 05, 2016 5:33 PM To: Nicholas Ford Subject: Fw: TracFone Statute of Limitations Waiver Form   Hi Nichols,   Hope you had a great Thanksgiving.   Also, wanted to check and see how the waiver form is coming along and also the percentages for intrastate verses interstate you were going to supply us with.   Let us know if you have any questions.   Thanks Nicholas.   Have a great afternoon.   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.