State Tax Assessor v. TracFone Wireless, Inc.
| Citation | 276 A.3d 521,2022 ME 36 |
| Decision Date | 23 June 2022 |
| Docket Number | Docket: BCD-21-135 |
| Parties | STATE TAX ASSESSOR v. TRACFONE WIRELESS, INC. |
| Court | Maine Supreme Court |
Jonathan M. Duntiz, Esq. (orally), Verrill Dana LLP, Portland, for appellant TracFone Wireless, Inc.
Aaron M. Frey, Attorney General, Thomas A. Knowlton, Dep. Atty. Gen. (orally), and Kimberly L. Patwardhan, Asst. Atty. Gen., Office of the Attorney General, Augusta, for appellee State Tax Assessor
Panel: STANFILL, C.J., and MEAD, JABAR, HORTON, and CONNORS, JJ.*
[¶1] TracFone Wireless, Inc., appeals from a summary judgment granted in favor of the Maine Tax Assessor entered in the Business and Consumer Docket (Murphy, J. ) concluding that TracFone's Lifeline service was subject to the state's prepaid wireless fee and service provider tax. TracFone also appeals from the trial court's denial of a motion to compel the production of documents related to taxpayers similarly situated to TracFone.
[¶2] Because we disagree that the Lifeline service was "paid for in advance," 25 M.R.S. § 2921(13) (2022), 35-A M.R.S. § 7102(4) (2022), we vacate the court's summary judgment as to the prepaid wireless fee. However, because TracFone sold its Lifeline service under 36 M.R.S. § 2552 (2022), we affirm the court's grant of summary judgment as to the service provider tax. Finally, we affirm the order denying TracFone's motion to compel the production of documents.
[¶3] The following is based on the parties’ stipulation of the facts and the additional undisputed facts in the summary judgment record. See Apple Inc. v. State Tax Assessor , 2021 ME 8, ¶ 3, 254 A.3d 405.
[¶4] TracFone sells telecommunications services and has operated in Maine since 1998. At all relevant times, TracFone did not own or operate its own telecommunications facilities but instead purchased the services from other licensed wireless network operators. It provided prepaid minutes for use by its customers on a "declining-balance basis," where TracFone would supply a set number of minutes that declined as the consumer used the service for calls, voicemail, texts, and directory and operator assistance.
[¶5] In 2005, the Federal Communications Commission granted TracFone a forbearance that allowed it to become an eligible telecommunications provider (ETC) for the Lifeline program. Lifeline is a program designed to provide universal access to telecommunications services, specifically to qualifying low-income consumers. The FCC created the Universal Service Fund to pay for Lifeline, and the Universal Service Administrative Company (USAC) administers the program and the Universal Service Fund. To be eligible, ETCs must certify that they would pass through the full amount of the subsidy—$9.25 a month per consumer for the relevant time period—to "qualifying low-income consumer[s] and that [the ETC] has received any non-federal regulatory approvals necessary to implement the rate reduction." 47 C.F.R. § 54.403(a)(1) (2020).
[¶6] In February 2010, the Public Utilities Commission granted TracFone's application to operate as a Lifeline-only ETC in Maine, and TracFone began offering the service, known as SafeLink Wireless, in March 2010. The program supplied to consumers each month a set number of minutes that subscribers could use on a declining-balance basis. Unused minutes were rolled over to the next month's balance. TracFone never charged Lifeline subscribers more than the subsidy it received from USAC. By the end of 2015, TracFone had 17,000 Lifeline subscribers in Maine.
[¶7] In April 2014, the Maine Revenue Service initiated an audit of TracFone covering the period from December 1, 2012, to January 31, 2016. During the audit period, TracFone did not pay any taxes or fees to the Maine Revenue Service or the PUC on the subsidy it received from USAC. On July 28, 2016, the Assessor issued a notice of assessment and determined that TracFone should have been paying a service provider tax and a prepaid wireless fee.1 Based on the $9.25 subsidy per subscriber per month, the Assessor assessed a prepaid wireless fee of $1,208,459.42 and service provider tax of $439,333.25 for the audit period.
[¶8] On September 26, 2016, TracFone requested reconsideration of the assessments of the service provider tax and prepaid wireless fee. The Assessor upheld its original assessment. On May 22, 2017, TracFone filed a statement of appeal with the Board of Tax Appeals, which, on April 21, 2018, upheld the assessment of the prepaid wireless fee but determined that Lifeline was a "prepaid calling service" subject to the sales tax and not the service provider tax. The Board of Tax Appeals denied TracFone's subsequent request for reconsideration.
[¶9] Both the State Tax Assessor and TracFone then petitioned for review in the Superior Court (Kennebec County, Stokes , J. ), which recommended transfer to the Business and Consumer Docket. The Business and Consumer Docket (Murphy, J. ) accepted the transfer. During discovery, on February 3, 2020, the court denied TracFone's motion to compel the release of information about taxpayers that TracFone asserted were similarly situated to it. Following the close of discovery, both parties moved for summary judgment. On April 7, 2021, the court granted the Assessor's motion for summary judgment and held that the Lifeline service was subject to the service provider tax and the prepaid wireless fee. TracFone timely appealed. See 14 M.R.S. § 1851 (2022) ; M.R. App. P. 2A, 2B(c)(1).
[¶10] On appeal, TracFone contends that the court erred in granting a summary judgment in favor of the Assessor and determining that TracFone was subject to both the prepaid wireless fee and the service provider tax. Additionally, TracFone argues that the court erred in denying its discovery motion to compel the Assessor to release records to establish the Assessor's policy, practice, or interpretation prior to the audit period.
[¶11] In reviewing a motion for summary judgment "[w]e review de novo whether there was no genuine issue of material fact and whether either party was entitled to judgment as a matter of law." Warnquist v. State Tax Assessor , 2019 ME 19, ¶ 12, 201 A.3d 602. We also review de novo issues of statutory interpretation. Apple Inc. , 2021 ME 8, ¶ 12, 254 A.3d 405. Because the trial court's review of the Board of Tax Appeals’ decision was de novo, see 36 M.R.S. § 151-D(10)(I) (2022), we review the trial court's interpretation without deference to the Board's legal determinations. See Warnquist , 2019 ME 19, ¶ 12, 201 A.3d 602. On appeal to the Superior Court, "[t]he burden of proof is on the taxpayer." 36 M.R.S. § 151-D(10)(I).
[¶12] In interpreting a statute, we first look to the "plain meaning of the statutory language to give effect to the Legislature's intent," and only if the statute is ambiguous will we "look beyond that language to examine other indicia of legislative intent, such as legislative history." Wuori v. Otis , 2020 ME 27, ¶¶ 6-7, 226 A.3d 771 (quotation marks omitted). However, we construe taxation statutes "most strongly against the government and in the [taxpayer's] favor, and we will not extend [a taxation statute's] reach beyond the clear import of the language used." Goggin v. State Tax Assessor , 2018 ME 111, ¶ 13, 191 A.3d 341 () (quotation marks omitted).
[¶13] The Legislature enacted the prepaid wireless fee as an alternative method of taxing any prepaid wireless provider who lacks a regular monthly billing cycle and whose telecommunications service is provided without a periodic bill.2 35-A M.R.S. § 7101(6) (2022). The prepaid wireless fee requires that "seller[s] of prepaid wireless telecommunications services ... collect the prepaid wireless fee from the prepaid wireless consumer for each retail transaction occurring in this State."3 35-A M.R.S. § 7104-C(2)(A) (2022). Maine law defines "[p]repaid wireless telecommunications service" as "a cellular or wireless telecommunications service that allows a caller to dial 9-1-1 to access the E-9-1-1 system, which service must be paid for in advance and is sold in predetermined units or dollars that declines with use in a known amount." 25 M.R.S. § 2921(13) ; 35-A M.R.S. § 7102(4).
[¶14] For TracFone's SafeLink service to be a prepaid wireless telecommunications service and therefore subject to the prepaid wireless fee assessed, it must be "paid for in advance" and "sold in predetermined units or dollars that decline[ ] with use in known amounts." 25 M.R.S. § 2921(13) ; 35-A M.R.S. § 7102(4).
47 C.F.R. § 54.407(c) (2020) (emphasis added); see also In re Lifeline & Link Up Reform Modernization , 27 FCC Rcd. 6787, ¶ 303 (2012) ().
[¶16] Given that TracFone did not charge any SafeLink users for the service...
To continue reading
Request your trial
-
Express Scripts Inc. v. State Tax Assessor
...fact and the moving party is entitled to judgment as a matter of law. State Tax Assessor v. TracFone Wireless, Inc., 2022 ME 36, ¶ 11, 276 A.3d 521; M.R. Civ. 56(c). "We also review de novo issues of statutory interpretation," examining "the trial court's [decision] without deference to the......