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Home My WebLink AboutCenturyLink Appeal T. 37 CITY OF RENTON 1 C OCT 0 7 2015 enturyLink- RECEIVED CITY CLERK'S OFFICE October 6, 2015 Hearing Examiner City of Renton—City Clerk 1055 South Grady Way Renton,WA 9805755802 RE: Request for Appeal Qwest Corporation Qwest Corporation hereby objects to and requests an appeal from the September 17, 2015 letter of assessment issued to it. A copy of the Letter is attached hereto as Exhibit A. 1. Taxpayer's Name and Address Qwest Corporation c/o Glen White CenturyLink Tax Department 100 CenturyLink Drive, Mail-DH0011-0501 Monroe, LA 71203-2041 (318) 330-6782 2. Taxable Period Involved 01/01/2007 through 06/30/2015 3. Type and Amount of Tax in Dispute The letter claims an underpayment of Utility Tax together with penalty and interest. The Company hereby disputes and protests the assessment of$323,495.34 in Utility Tax(the "Contested Tax') together with associated interest in the amount of$192,518.79 and penalty in the amount of $79,357.49. 4. Statement of Grounds Upon Which the Taxpayer Relies The taxpayer objects to the Letter on the following grounds and/or requests the Letter be corrected or revised as follows: (A) The letter projects additional tax due for Company customers that were in two areas annexed by the City. The assessment was improperly based on estimates and assumptions, not factual data. P.O Box 4065 Monroe, LA 71211-4065 Tel: 318.330.6782 www.centurylink.com `'ftw' ,"'p ,►.I CenturyLink- (B) The letter improperly projects additional tax due on Utility Taxes collected from Company customers that should not be included as part of taxable revenues. (C) The letter improperly projects additional tax due on non-taxable Late Fees. (D) The letter improperly projects additional tax due on customer addresses that were properly sitused to the appropriate jurisdiction. (E) To the extent the underlying tax is vacated or revised,then the penalty assessed must be revised as well.To the extent the penalty assessed is not otherwise eliminated; the Taxpayer requests that the penalty be abated. The audit confirmed that the Taxpayer was properly registered with the City;the Utility Tax was timely remitted;the Company consistently made good effort to comply with the tax law; and the Company could not find where the City had noticed the Company or published the City's interpretation that any Utility Tax billed should be included in taxable revenues. 5. Relief Requested The Company therefore requests that: 1. The tax assessed of$323,495.34 be reduced to zero. 2. The assessed interest and penalty be revised to reflect the reductions in tax. 3. The assessed penalty not otherwise vacated be abated. For the foregoing reasons,the Taxpayer requests that the Assessment be revised based on the stated objections. The Taxpayer reserves its right to amend and supplement this request and asks for a hearing in this matter. Please find enclosed a check in the amount of$595,371.62. This payment is made in protest of the tax, interest, and penalty assessed. A separate check in the amount of$150 is also enclosed for the required filing fee. Qwest Corporation n White Manager Transaction Tax Audits DeMa oraw City O Administrative Services Iwen Wang,Administrator September 17, 2015 Glen White CenturyLink/Qwest Corporation Transaction Tax Audit Manager 100 CenturyLink Drive, Monroe, LA, 71203 Mailstop: LA00010501-5TS141 Re: CenturyLink/Qwest Corporation—City of Renton, WA Dear Mr. White: Tax Recovery Services (TRS) has been contracted by the City of Renton, Washington to conduct a utility audit on Qwest/CenturyLink for the period of January 1, 2007 through May 31, 2015. The City of Renton, Washington applies the Gross Receipts Utility Taxes under Chapter 5-11-1 of the City of Renton Municipal Code. CenturyLink/Qwest Corporation conducts telephone business activity inside the City of Renton. The audit of CenturyLink/Qwest Corporation was conducted according to Generally Accepted Accounting Principals and the laws and regulations of the State of Washington and of the City of Renton, Washington. Documents reviewed by Tax Recovery Services, LLC for the CenturyLink/Qwest Corporation audit included: -Information that concerned the November 2010 (sample month) billing system. The information included the revenue-related amounts for each category broken down by the Tax Distribution Code. CenturyLink also sent us a description of the non-taxable category of each item, and other tax-exempt information. -A billing file for February 2012 that concerned wholesale sales to other telecommunications companies. -A copy of the tax returns for November 2010 and February of 2012 and some back-up information on how they computed these two tax returns. -A report that showed revenue-related information billed out of the CRIS system for November 2010 customers where the customer had a Renton address in the system, referred to as "TARlnfo."This report also showed activity that occurred in 2014, and listed customer accounts that were part of CenturyLink during other time periods near to these dates. Actual tax amounts and revenue amounts were Renton City Hall 9 1055 South Grady Way• Renton,Washington 98057 • rentonwa.gov fir` *4090, not on this spreadsheet. -A mapping done by the CenturyLink IT department showing geographical locations of customer addresses listed as inside the Benson annex. -A chart listing addresses missing from the Renton jurisdiction in the previous TARlnfo for 2014, showing that these addresses were either missing or correctly coded in for July 2014. -Invoices for CenturyLink/Qwest Corporation Renton customers. -Tax returns for the audit period. Findings: -For approximately 13 months during the audit period, CenturyLink/Qwest Corporation did not submit taxes owed to Renton for customers in the Benson Hill and Aqua Barn annexation areas. -From January of 2007 through the end of the audit, CenturyLink/Qwest Corporation collected taxes from their customers to pay their utility tax, but did not include this amount as part of their taxable revenues. -CenturyLink/Qwest Corporation did not pay utility taxes on late fees collected for January 1, 2007 through the end of the audit period. -Some customer addresses inside the City of Renton and that were correctly coded by Qwest to the Renton jurisdiction in November 2010 were not coded to the correct jurisdiction during a period of time previous to July 2014. Please refer to our schedules outlining gross income and deductions as well as taxes, interest and penalties owing. The amount due for CenturyLink came to $595,371.62 This includes the amount of the tax for$323,495.34,the interest amount for$192,518.79 and the penalty amount for $79,357.49. We also would like to thank you and your staff for all of your assistance in conducting this audit. Sincerely, Iwen Wang Administrative Services Administrator City of Renton City of Renton, Washington Department of Finance Registration Field Auditor's Report SUMMARY SHEET Period of Adjusments: January 01, 2007 through June 30, 2015 Firm Name: CenturyLink/Qwest Corporation Business Address: 100 CenturyLink Drive Monroe, LA 71203 Mailstop: LA00010501-5TS141 Attn: Glen White Classes 2007 2008 2009 2010 2011 2012 2013 2014 2015 T 0 T A L UTILITY TAX $35,693.35 $78,095.78 $56,185.9"7 $31,934.81 $30,850.89 $29,582.59 $27,588.83 $24,145.30 $9,417.81 $289,932.22 Rounding $0.01 Corrected Tax $590,582.43 $633,650.39 $598,619.76 $518,327.40 6469,905.45 1 $447:191.491 $412,275.37 $369,003.34 $174,056.38 $4,213,919.01 Reported Tax $.554,889.08 $555,554.61 $542,433.79 $486,392.59 $439,054.56 $417915.90 $384,686.54 $344,858.04 $164,638.57 $3,890,423.68 EBIT/(CREDIT) ;35,693.35 $78,095.78 $56,185.97 $31,934.81 $30,850.89 $29,582.59 (x$227,588.83 $24,145.30 $9,417.81 $323,495.34 Date: C , �, y j Audit submitted by: Michael J. Crisp . ! `, REMARKS: YEARLY YEAR INTEREST DR/(CR) TOTALS 2007 $30,696.29 2008 $64,999.99 2009 $41,483.10 2010 $19,328.70 2011 $14,982.10 2012 $10,814.58 2013 $6,779.68 2014 $3,063.19 2015 $371.16 otal Interest Dr(Cr): $192,518.79 otal Tax (Shown Above) DR/(CR) $323,495.34 otal Penalty (Per Calc Sheet) Dr./(Cr.) $79,357.49 otal Due ote:Refer also to Refund Schedule for calculation of roaming refund which is to be subtracted from Total Due amount for this audit $595,371.62 xtensions Dr. Noted Date 71-ewer Cr. Noted Date ,1FA CENTURxTEL, INC. Check Number � � Cer1tUCyLlrik' ATTN: Controller's Group 0007871848 P.O. BOX 4065 JPMORGAN CHASE BANK MONROE, LA 71211 DALLAS 88-88/1113 1-877-386-7191 Void after 90 days 10/06/2015 *** ONE HUNDRED FIFTY USD*** USD ***********150.00* Pay to the order of; CITY OF RENTON LICENSING DIVISION -.7..�G��``' 1055 S GRADY WAY /-- RENTON .WA 98055 Protected by positive pay 11'000 ?8 ? L8 4811' 1: L L L 3008801: 11'0 58000 ?98 ?ii' :r►�� Centur LII1�C' CENTURYTEL, INC. ' Check Number q1� Y ATTN: Controller's Group 0007871825 P.O. BOX 4065 JPMORGAN CHASE BANK MONROE, LA 71211 DALLAS e8-88/1113 1-877-386-7151 Void after 90 days 10/06/2015 *** FIVE HUNDRED NINETY-FIVE THOUSAND THREE HUNDRED SEVENTY-ONE USD and 62/100 *** USD *******595,371.62* Pay to the order of: CITY OF RENTON LICENSING DIVISION ' 1 . 1055 S GRADY WAY f RENTON WA` 9805S Protected by positive pay 110000 ?8 ? L8 2 5ii' : L11300131301: 1120 58000 ?98 ?'1i' Y o CITY OF R�NTON Receipt N2 2227 U City Clerk Division + + 1055 South Grady Way Renton,WA 98057 425-430-6510 Date ❑ Cash ❑ Copy Fee ❑ Notary Service (�)Check No. `155'( IS a5 ❑ Appeal Fee H 1h U+tA Atx Description: �Kln� Funds Received From: �a 1 Amount $5-9,5-, 3 11- 6,)- Name tI• (oa-- Nameg�- Address Qp fofos City/Zip 'Y�J�csv�^r'o�, L JMAk c '� City Staff Signature ��Y o CITY OF RENTON Receipt N2 2226 O � City Clerk Division + + 1055 South Grady Way Renton,WA 98057 INTO 425-430-6510 Date 10 ❑ Cash ❑ Copy Fee ❑ Notary Service IR Check No. -1q1l9'L(& � ElPAppeal Fee Description: �t � — r Funds Received From: Amount $ 15'� Name � � 1�+^L' �QU,?e,y� Address _ L�0(v! City/Zip '1(V�p,n1'ot,i �-1�1 `I I L1 City Staff Signature