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Ex 23 Notice of Appeal Utility Tax Assessment Nov 6 2019.pdf
)CrnY’OFRENTONNOV062013tjJRECEIVEDLANEPOVVELLScoliM.EDWARDS206.223.7010edwardsslanepowe]Lcom14205thAvenue,Suite4200P.O.Box91302Seattle.WA98111-9402November6.2019CONFIDENTIAL-EXEMPTFROMPRACityClerkCityofRentonRentonCityHalt1055S.GradyWayRenton,WA98057Re:TracfoneWireless,Inc.(“Tracfone“)AppealofUtilityTaxAssessmentDearCityHearingExaminer:PursuanttoRentonCityCodeSection5-26-18.B,TracFonesubmitsthefollowingappealoftheCityofRenton’s(“City”)taxassessmentdatedFebruary14,2019.ThisappealpetitionispresentedtotheCityClerkasrequiredbytheSection5-26-18.B.TheappealisforthetaxperiodJanuary1,2007throughOctober31,2017,(the“TaxPeriod”).Acheckforthe$150filingfeeisenclosedherewith.All“PersonalInformation,”asdefinedinRCW42.56.230,relatingtothetaxassessmentreferencedintheOctober17,2019,letterenclosed,orrelatedtothisappeal,isconfidentialandnotsubjecttodisclosureunderthePublicRecordsAct.AnyunauthorizeddisclosureofTracFone’sPersonalInformationorTaxInformationisagrossmisdemeanorsubjecttoprosecution.SeeRCW84.08.210;82.32.330.1.TaxpayerName,PhoneNumber,andAddress:ThetaxpayerinthisappealisTracFoneWireless,Inc.(“TracFone”).TracFone’sbusinessaddressandtelephonenumberare:9700NW112thAvenueMiami,FL3317$(800)867-7183STREETADDRESS.1420FIFTHAVENUESUITE4200ISEAITLE,WA98101-2375P2062237000F206.2237107LANEPOWELL.COMMAILINGADDRESS:P0BOX91302ISEATTLEWA981119402APROFESSIONALCORPORATION CityClerkNovember6,2019Page22.DeterminationUnderAppeal:TracFoneherebyappealstheOctober17,2019,finaldeterminationoftheCityofRentonAdministrativeServicesDepartment(“Department”),affirmingtheCity’sFebruary14,2019,telephoneutilitytaxassessment.3.Receipt:AcopyofthereceiptevidencingpaymentofthecontestedassessmentisattachedasExhibitA.4.StatementofGroundsforAppeal:A.FactualBackgroundTracFoneisanon-facilitiesbasedresellerofprepaidwirelessairtime.Thecompanydoesnotown.operate,ormanageanytelephonefacilities.Rather,TracFonepurchasesairtimeatwholesalefromfacilitiesbasedtelecommunicationscompaniesandresellsthatairtimeatbothwholesaleandretail.TracFone’swholesalesalesofprepaidwirelessairtimearemadebothtodistributors(whointurnreselltheairtimeatwholesale)andtoretailerswhoreselltheairtimeatretailtoconsumerswhousetheairtime.TracFone’sretailsalesofairtimearemadeviatheInternetand/orbycallingan$00telephonenumber.InoraboutJune2013,MichaelCrispofTaxRecoveryServices,LLCcontactedTracFonetoperformatelephoneutilitytaxauditonacontingentfeebasisfortheCity.TheCityagreedtopayMr.Crisp25%ofanytaxesheassessedthattheCitycollected.InorderaboutAugust2017,Mr.CrispsentTracFoneapreliminarydraftscheduleofassertedCityutilitytaxesforperiodsthroughMay31,2013.Thedraftschedulecalculatedtaxonboth(1)Tracfone’sretailsaleofprepaidwirelessairtimetoCityresidentsand(2)theestimatedvalueofairtimeestimatedusedbyRentonresidentsthattheresidentspurchasedfromunrelatedthirdpartysellerswhohadpurchasedtheairtimeatwholesale.Contemporaneouslywithsendingthedraftschedule,Mr.Crispsenta“methodology”documentassertingthatthedraftschedulescalculatedtaxontheestimatedvalueof“usage”ofairtimepurchasedfrompersonsotherthanTracFonebecause“itistruethattaxationofthisprepaidphoneactivityisproperlyowedonusage,notsales.”The“methodology”documentdoesnotciteanyauthorityorprovideanyanalysisinsupportofMr.Crisp’sposition.Throughoutthecontingentfeeauditprocess,Mr.CrisprepeatedlydeclinedrequeststoschedulemeetingsbetweentheCityandTracFone’scounsel.InDecember2017,Mr.Crispacknowledgedthattelephoneutilitytax“isnotbasedonusage”asassertedinhis“methodology”andamendedthe“methodology”documenttoomitthatassertion,withoutchangingthedrafttaxschedule.Crispcharacterizedtheestimatedvalueofusageofairtimepurchasedfromunrelatedthirdpartiesasestimated“indirect”salesofairtimethat“customersbuyindirectlyfromTracFone,viaoutsidecarrierssuchasTargetorBestBuy.”12511O.00000217$32340v1 CityClerkNovember6,2019Page3OnoraboutFebruary14,2019,onIRSletterhead,Mr.CrispsenttwoletterspurportingtoencloseauditassessmentsissuedonbehalfoftheCity,onefortheperiodJanuary1,2007,throughMay31,2013,andthesecondfortheperiodJune1,2013,throughOctober31,2017.TheCitysubsequentlyadvisedthatithadauthorizedMr.Crisp’sletterandconsideredtheletterstoconstituteaformaltaxassessment.TheCitysubsequentlyextendedthedeadlinetopetitionforacorrectionoftheassessmentthroughJune17,2019.OnJune17,2019,TracFonetimelyfiledapetitionforacorrectionofassessment.TheCityAdministrativeServicesDepartment(“Department”)andTracfoneparticipatedinaconferenceregardingthepetitionforcorrectionandonOctober17,2019,theDepartmentissueditsfinaldetermination.AsrequiredbyRentonMunicipalCode5-26-18.A,TracFonehaspaidthecontestedassessmentasaconditionprecedenttoappealingtotheCityHearingExaminer.B.LeaIAnalysis1.RentonisnotauthorizedtoimposetelephoneutilitytaxonTracfonebecauseTracFoneisnotengagedinthe“telephonebusiness”asdefinedbyRCW82.16.010.Citiesdonothaveplenarytaxingauthority.Rather“[mJunicipalitiesmusthaveexpressstatutoryauthoritytolevytaxes.”CityofSeattlev.T-MobileMobileWestCorp.,199WnApp.79,82,397P.3d931(2017).Whilecitieshavebeenstatutorilyauthorizedto“licenseforrevenue,”theirauthoritytoimposelocaltelephoneutilitytaxeshavebeenspecificallylimitedbyRCW35A.$2.060.RCW35A.82.060limitstheimpositionoflocalutilitytaxestopersonsengagedwithinthecityinthe“telephonebusiness”asthattermisdefinedbyRCW82.16.010.Theterm“telephonebusiness”means“thebusinessofprovidingnetworktelephoneservices,”RCW82.16.010(7)(b)(iii),whichinturnisdefinedaseither(1)providing“accesstoatelephonenetwork”,or(2)providing“telephonic,voice,dataorsimilar...transmissionforhire.”RCW82.16.010(7)(b)(iii).TracFonedoesnottransmittelephonic,voice,data,orothersignals.NordoesTracFoneprovide“accessto”atelephonenetworkwithinthemeaningofRCW82.16.010.Thestatutedoesnotspecificallydefinetheactivityofprovidingaccess.Thestatutedoes,however,imposelimitsonthemeasureoftaxthathelpdiscernthescopeofthatstatutoryactivity.Specifically,RCW35A.$2.060prohibitstaxingthe“portionofthenetworktelephoneservicewhichrepresentschargestoanothertelecommunicationscompanyasdefinedinRCW80.04.010.”(Emphasisadded).Theuseoftheword“another”reflectsthatapersonengagedinataxabletelephonebusinessmustbea“telecommunicationscompany”asdefinedbyRCW80.40.010.Itisaxiomaticthat‘eachwordofastatuteistobeaccordedmeaning.”Statev.Roggenkamp,153Wn.2d614,624,106P.3d196(2005).Byusingtheword“another”ratherthan“a,”theLegislatureindicatedthatpersonsengagedinthetelephonebusinesssubjecttoutilitytaxmustbetelecommunicationscompanies.12511O.000002/7832340v1 CityClerkNovember6,2019Page4A“telecommunicationscompany”isdefinedasanentity“owning,operating,ormanaginganyfacilitiesusedtoprovidetelecommunicationsforhiresale,orresaletothegeneralpublicwithinthestate.”RCW80.04.101(emphasisadded).Thisalsoindicatesthatapersonwhodoesnotownoperateormanagenetworkfacilitiescannotengageintheactivityofprovidingaccesstoatelephonenetwork.Accesstothenetworkisprovidedbythetelecommunicationscompaniesthatown,operate.ormanagethenetworkfacilities.Further,anyambiguityastowhetherthestatuteauthorizesimpositionofutilitytaxonpersonswhodonotownoperateormanageutilityfacilitiesisrequiredto“beconstruedmoststronglyagainstthetaxingpowerandinfavorofthetaxpayer.”AgrilinkFoods,Inc.v.Dep‘tofRevenue,153Wn.2d392,396-97,103P.3d1226(quotingSkiAcres,Inc.V.KittitasCounty,11$Wn.2d852,857,827P.2d1000(1992)).Inshort,becauseTracFoneisnotengagedinthetelephonebusinessasdefinedbystatute,RentonisnotstatutorilyauthorizedtoimposetelephoneutilitytaxonTracFone.2.EvenifTracfoneissubjecttolocaltelephoneutilitytax,itsgrossincomefromwholesalesalearestatutorilyexcludedfromthecity’stelephoneutilitytaxingauthority.EvenifTracFonewereengagedinthetelephonebusiness,andthereforesubjecttolocalutilitytaxauthority,City’sauthorityislimitedtotaxinggrossincomefromretailsaleson“intrastatetolltelephoneservice.”RCW35A0.82.060expresslyprohibitsRentontaxinggrossincomefrom“chargesfornetworktelephoneservicethatispurchasedforthepurposeofresale.”TracFone’swholesalesalesofwirelessairtimetopersonswhopurchasetheairtimetoresellit(i.e.purchaseatwholesale)areoutsidetheCity’sstatutoryauthority.8.Conclusion:Accordingly,TracFonesubmitsthisappealseekingtheCityHearingExaminer’scancellationoftheassessmentandrefundofTracFone’sfullpaymentplusinterest.forthereasonssetforthabove,theCity’sutilitytaxdoesnotapplytoTracFone.Alternatively,TracfoneseeksremandoftheassessmenttorecalculatethecorrectamountofutilitytaxbyremovingwholesalesalesofwirelessairtimefromTracFone’staxablegrossincome.Verytrulyyours,LANEPOWELLicScottM.EdwardsCc:AdministrativeServicesDepartmentAdministrator1251IO.000002/7832340v1 ExhibitAdryiwRENTON(055SGRADYWAYRENFUN,WA98057425-430-6850Reg##/Rcpt#:001-00162469OHAccountingDate:Non,Nov4,2019Date/Tine:Non,Nov4,20192:44PMPRAXISREFA:TRACFONEWIRELESSTC:9000FEEAMOUNT:$:336,442.69RECEIPTTOTAL$3313,442.69*******************‘1****N*4**1@**1***PaymentDataPmnt#:1Payer:TRACFONEWIRELESSMETHODCHECK$336,442.69RefA:24764RECEIPTSUMMARYTOTALTENDERED$336,442.69RECE1PTTOTAL$336,442.69CHANGEDUE$0.00HAVEANICEDAY!n*************t*****%***t*Pt***********u:I.Q,5238 LANEPOWELLPCDATE:77-05-79PAYEE:CityofRentonVENDOR#:80409CHECK#:773872REF.#INV.#INV.DATEACCT#INVOICEDESCRIPTIONAMT.PAID673451125110.0219110511-05-19150.00________________________________________________TOTAL150.00LANEPOWELLPC773872CHECKDATE11-05-19ATtORNEYSATLAW1420FIFTHAVENUE,SUITE420011.24/1210(8)P.O.Box91302WellsFargoBankSEATTLE,WA98111-940212154thAvenue206223-7000Seattle,WA98101CHECKAMOUNT$150.00ONEHUNDREDFIFTYAND00/100DollarsTwoSignaeequledonCheOver$2,500PAYCityofRentonTOTHE1055S.GradyWayORDEROFRenton,WA98057____________________________________VOIDAFTER6MONTHS“??8.?”‘LLOOO2’1’[1LE99[1B9” CITYOFRENTONCityClerkDivision1055SouthGradyWayRenton,WA98057425-430-6510UCopyFeeUAppealFeeFundsReceivedFrom:NameAddressCity/ZipCityStaffSignature:\1ReceiptLiCashDCheckNo.DateDescription:?UNotaryServiceU;-k2().Lrp&(Amount$\‘j.,