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Home My WebLink About06-07-2021 - HEX email - TracFone v. Renton_ Tax administration rules adopted under RMC 5-26-20CAUTION: This email originated from outside the City of Renton. Do not click links, reply or open attachments unless you know the content is safe. From:Phil Olbrechts To:Edwards, Scott M. Cc:Kari L. Sand; Cynthia Moya; Degginger, Grant Subject:Re: TracFone v. Renton: Tax administration rules adopted under RMC 5-26-20 Date:Monday, June 07, 2021 9:53:56 AM Thank you Mr. Edwards. A few quick questions on the refund interest: 1. In line 27, Column A on the no retail margin spreadsheet, the first interest period ends at 12/21/19. Should this be 12/31/19? Also, the amount for this period is blank in both spreadsheets. Do you have that figure or was it too de minimum for inclusion? 2. Using the no retail margin spreadsheet as an example, was the timing of the 91k refund already paid by the City a factor in computing refund interest? It appears to me that refund interest was to be computed for the $154,578 amount until the 91k refund was paid on May 15, 2021 and then subsequently refund interest would be based upon the $63,322.06 figure. On Mon, Jun 7, 2021 at 8:01 AM Edwards, Scott M. <EdwardsS@lanepowell.com> wrote: Examiner Olbrechts, The parties have conferred and agree: 1. If the Hearing Examiner rules that a retail margin adjustment is appropriate, the additional refund due is $80,077.38 plus $6.27 per day from May 28 to the date of payment. 2. If the Hearing Examiner rules that no retail margin adjustment should be made, the additional refund due is $66,513.50 plus $5.20 per day from May 28 to the date of payment. Schedules reflecting both computations are attached. The file named TracFone Calculation of Renton Refund Due – 2019 Interest Rate Corrected 2021-06-04.xls reflects the computations under no. 1 above while the file named TracFone Calculation of Renton Refund Due – RCW interest and penalties only.xls reflects the computations under no. 2 above. SCOTT M. EDWARDS Shareholder Bio | vCard edwardss@lanepowell.com D 206.223.7010 C 206.529.7030 LANEPOWELL.COM From: Phil Olbrechts <olbrechtslaw@gmail.com> Sent: Thursday, June 3, 2021 2:50 PM To: Kari L. Sand <ksand@omwlaw.com> Cc: Cynthia Moya <CMoya@rentonwa.gov>; Edwards, Scott M. <EdwardsS@LanePowell.com>; Degginger, Grant <DeggingerG@LanePowell.com> Subject: Re: TracFone v. Renton: Tax administration rules adopted under RMC 5-26-20 CAUTION: This is an external email. Do NOT click links or open attachments unless you are certain the content is safe. Thank you Ms. Sand. Your reference to the last whereas clause in Ordinance 5756 was very helpful in resolving the conflict. Does Tracfone agree with the City's position? If so, can the parties take a stab at agreeing upon the interest and penalty due under the City's new position? I already have Tracfone's interest computation under their retail margin deduction position. On Thu, Jun 3, 2021 at 2:26 PM Kari L. Sand <ksand@omwlaw.com> wrote: Good afternoon, Examiner Olbrechts and TracFone counsel: Having conferred with Renton Tax & License Manager Nate Malone, I can confirm that the City of Renton has not adopted any administrative tax rules under RMC 5-26-20 to date, nor has Renton adopted any formal administrative interpretations of the City's tax regulations, particularly with regard to the computation of interest due on late tax payments. You are correct that a conflict exists between RMC 5-11-2(B), which imposed 12% yearly late payment interest for utility tax until November, 2019 when it was repealed by Ordinance No. 5944, and RMC 5-26-11(A), which imposed a much lower late payment interest rate consistent with RCW 82.32.050 for utility taxes, starting on January 1, 2016. This conflict in the RMC interest provisions was unintended, and as best as can be discerned now upon greater scrutiny, the City’s intent was to administer the tax codes consistently (see last “whereas” recital of Ordinance No. 5756) and to repeal any conflicting provisions, such as RMC 5-11-2(B), upon the passage of Ordinance No. 5756, passed 5-18-15 and effective 1-1-2016. Ordinance No. 5756 established a new Chapter 26, entitled “Tax Administrative Code,” of Title V (Finance and Business Regulations), of the Renton Municipal Code, providing administrative processes for administering City tax codes. The later repeal of RMC 5-11-2(B) by Ordinance No. 5944 appears to be “housekeeping” to clean up the code and eliminate the conflict between the two interest provisions. The unintended code conflict and careful review of Group Health Co-op. v. City of Seattle, 146 Wash. App. 180, 102-03, 189 P.3d 216 (2008), has prompted the City of Renton to change its position on the application of the statutes for the computation of interest and penalties from that taken at the hearing last week on May 27, 2021. Resolving the conflict in the RMC on the computation of interest, it appears the intend was that RMC 5-26-11(A) applied at the time of the City of Renton’s October 17, 2019 Final Assessment Affirming the City’s February 14, 2019 Telephone Utility Tax Assessment, and based on the Group Health case, interest should be computed on late utility tax payments consistent with RCW 82.32.050 for the entire audit period. Likewise, the penalty must also be computed consistent with RCW 82.32.090(1) and (2) and would increase from 25% (under the former RMC 5-11-2(A)) to 34% (29% + 5% for “substantially underpaid” taxes). I trust the foregoing answers your questions. Please let me know if you have any additional questions or require additional information. Sincerely, Kari L. Sand | Attorney Ogden Murphy Wallace P.L.L.C. 901 Fifth Avenue, Suite 3500 Seattle, WA 98164 Direct: 206.447.2250 | Fax: 206.447.0215 ksand@omwlaw.com | www.omwlaw.com Take a look at Ogden Murphy Wallace’s new website! CONFIDENTIAL COMMUNICATION - This communication constitutes an electronic communication within the meaning of the Electronic Communications Privacy Act, 18 U.S.C. Section 2510, and its disclosure is strictly limited to the recipient intended by the sender. It may contain information that is proprietary, privileged, and/or confidential. If you are not the intended recipient, any disclosure, copying, distribution, or use of any of the contents is STRICTLY PROHIBITED. If you have received this message in error, please notify the sender immediately and destroy the original transmission and all copies. From: Phil Olbrechts <olbrechtslaw@gmail.com> Sent: Tuesday, June 1, 2021 9:48 PM To: Kari L. Sand <ksand@omwlaw.com> Cc: Cynthia Moya <CMoya@rentonwa.gov>; Edwards, Scott M. <EdwardsS@lanepowell.com>; Degginger, Grant <DeggingerG@lanepowell.com> Subject: Re: TracFone v. Renton: Tax administration rules adopted under RMC 5-26-20 A point of clarification to my formal opinion request -- Ordinance No. 5756, which adopted Chapter 5-26 RMC, didn't repeal RMC 5-11-2, which at the time imposed a 12% yearly late payment interest rate for utility taxes only. The utility tax12% yearly interest rate was adopted by Ordinance No. 5367. which as best as I can tell wasn't repealed until replaced by a new 5-11-2 by Ordinance No. 5944 in November, 2019. On Tue, Jun 1, 2021 at 8:42 PM Phil Olbrechts <olbrechtslaw@gmail.com> wrote: Ms. Sand, Has the City adopted administrative tax rules under RMC 5-26-20 or adopted any formal administrative interpretations of the City's tax regulations? I was not able to find any such documents on-line and can take judicial notice of them for writing my decision. If the tax department does make administrative interpretations, I'm looking for anything that would clarify how to resolve the late payment interest conflict between RMC 5-11-2 (which imposed 12% yearly late payment interest for utility tax until November, 2019 when it was repealed by Ordinance 5944) and RMC 5-26-11, which as presented at the hearing imposed a much lower late payment interest rate for most if not all city taxes, includig utility taxes, starting in 2016. Tracfone is of course also invited to identify any formal administrative interpretations on the issue as well. On Thu, May 27, 2021 at 5:31 PM Kari L. Sand <ksand@omwlaw.com> wrote: Greetings, Examiner Olbrechts and everyone: Following today’s hearing, I would be remiss if I did not point out that if the Examiner decides that interest must be computed consistent with RCW 82.32.050, as TracFone argued, then the penalty must also be computed consistent with RCW 82.32.090(1) and (2) and would increase from 25% (under the former RMC 5-11- 2(A)) to 34% (29% + 5%). My apologies for not pointing this out before today’s proceedings ended. To avoid any surprises later, in the event further corrections are warranted, it seemed important to also note the effect of the RCW on the computation of the penalty amount. Sincerely, Kari L. Sand | Attorney Ogden Murphy Wallace P.L.L.C. 901 Fifth Avenue, Suite 3500 Seattle, WA 98164 Direct: 206.447.2250 | Fax: 206.447.0215 ksand@omwlaw.com | www.omwlaw.com Take a look at Ogden Murphy Wallace’s new website! CONFIDENTIAL COMMUNICATION - This communication constitutes an electronic communication within the meaning of the Electronic Communications Privacy Act, 18 U.S.C. Section 2510, and its disclosure is strictly limited to the recipient intended by the sender. It may contain information that is proprietary, privileged, and/or confidential. If you are not the intended recipient, any disclosure, copying, distribution, or use of any of the contents is STRICTLY PROHIBITED. If you have received this message in error, please notify the sender immediately and destroy the original transmission and all copies. This message is private or privileged. If you are not the person for whom this message is intended, please delete it and notify me immediately, and please do not copy or send this message to anyone else.