TracFone Wireless, Inc. v. Wash. Dept. of Revenue

• Decision Date: 10 November 2010
• Docket Number: No. 82741-9.,82741-9.
• Citation: 170 Wash.2d 273,242 P.3d 810
• Parties: TRACFONE WIRELESS, INC., Appellant, v. WASHINGTON DEPARTMENT OF REVENUE, Respondent.
• Court: Washington Supreme Court

242 P.3d 810

170 Wash.2d 273

TRACFONE WIRELESS, INC., Appellant,

v.WASHINGTON DEPARTMENT OF REVENUE, Respondent.

No. 82741-9.

Supreme Court of Washington, En Banc.

Argued Nov. 10, 2010.

Decided Oct. 28, 2010.

Scott M. Edwards, Lane Powell P.C., Seattle, WA, for Appellant.

David M. Hankins, Brett S. Durbin, Office of the Attorney General, Olympia, WA, for Respondent.

Stephen Alan Smith, K & L Gates, L.L.P., Seattle, WA, amicus counsel for T-Mobile USA, Inc.

MADSEN, C.J.

¶ 1 At issue is whether the state enhanced 911 excise tax (state E-911 excise tax) used to fund emergency communications systems in Washington State must be paid on prepaid wireless cellular telephone (cell phone) service. TracFone Wireless, Inc. (TracFone) filed this tax refund suit contesting the Washington State Department of Revenue's (Department) determination that the E-911 tax must be paid on its wireless cell phone service. We conclude that the plain language of the relevant statutes imposes the tax on prepaid wireless cell phone service and accordingly uphold the trial court's grant of summary judgment in favor of the Department.

FACTS

¶ 2 TracFone sells cell phones and prepaid wireless telephone services. It does not own or operate any wireless network facilities but instead contracts with other radio communication service companies to provide wireless telephone service and radio access lines and then resells the service. As of 2004, TracFone provided wireless service by reselling service offered by more than 35 licensed network operations in the United States. TracFone's prepaid wireless services and handsets are sold through more than 70,000 retail locations in this country, as well as through its Internet site. Approximately 30,000 cell phones are sold in this fashion every month.

¶ 3 The retailers also sell airtime cards for use with TracFone's cell phones. Thesecards have no value until activated upon sale to the subscriber. Activation requires that the subscriber provide TracFone with the cell phone's serial number and the zip code in which the subscriber will primarily use the cell phone. TracFone chooses an underlying carrier for the area and sends a code to the cell phone that programs it with the correct home area, telephone number, and rating information. Once a TracFone cell phone is active, a subscriber may purchase additional airtime minute cards in increments of 30 to 400 minutes or by contacting TracFone and adding additional time. TracFone retains the right to modify or cancel the service for any reason at any time.

¶ 4 A TracFone cell phone has a service end date. TracFone contacts its subscribers to notify them of pending end dates. Airtime minutes must be used prior to expiration of the service end date or they expire. If minutes are not used and no new minutes are added prior to expiration, the service is deactivated. For example, the service period for a 60 minute airtime card is 90 days. If the subscriber does not add additional minutes prior to the service end date, 90 days after activation, the cell phone is deactivated and anyremaining minutes are lost. If the subscriber does purchase additional airtime prior to the service end date, the end date is extended by the service period that applies for the number of minutes added.

¶ 5 If minutes are used before the end of the service period, the telephone number for the subscriber's cell phone remains assigned to that subscriber. TracFone deactivates the service only when additional minutes are not added before the service period expires.¹

¶ 6 In 1981, the legislature authorized counties to impose an excise tax on the use of telephone access lines to fund emergency communications services. Laws of 1981, ch. 160, § 3. In 1991, the voters approved Referendum 42, which imposed a uniform statewide tax on each switched access telephone line, i.e., landline telephone service, to fund statewide coordination and management of the E-911 system. Laws of 1991, ch. 54, § 11. In 1994, the legislature found that the volume of 911 calls by users of cellular and other wireless communications systems had increased but these users did not use switched access lines and so were not subject to the E-911 tax. Laws of 1994, ch. 96, § 1. The legislature extended the county E-911 excise tax to cell phones. Id. §§ 2-4 (amending RCW 82.14B.020-.040).

¶ 7 In 2002, the legislature increased the county tax and expanded the state excise tax to 20 cents per month per radio access line. Laws of 2002, ch. 341, §§ 8-9 (amending RCW 82.14B.030-.040). The House Bill Report on H.B. 2595, the enacting legislation, described changes in the cellular industry and problems resulting from concurrent jurisdiction of county, state, and federal governments. To explain the need for taxation of wireless phones, the report noted these examples:

In central Washington, a 911 call might be answered by a dispatcher in Okanogan, Grant, or Chelan County. There areinstances where emergency assistance has been dispatched to Long Beach when the incident is really in Ocean Park. Technology is available to pin down the location of the caller.

Cellular calls to 911 centers take three times as long to process to determine the location of the caller under our current systems. But cellular use is increasing; 36 percent of 911 calls come from cell phones. As the number of these calls increase, and as the number of wireline calls decrease, revenues are declining.

H.B. Rep. on H.B. 2595, at 3-4, 57th Leg., Reg. Sess. (Wash. 2002). The purposes of the state E-911 excise tax on radio access lines are to promote public safety and ensure adequate funding to support E-911 services. RCW 38.52.501. The law became effective on January 1, 2003, and imposed a county and state E-911 tax on "all radio access lines whose place of primary use is located within the state." Laws of 2002, ch. 341, § 15; RCW 82.14B.030(2), (4).

¶ 8 The state E-911 excise was originally paid on TracFone's service in 2003; however,TracFone states that when it discovered that the company preparing its tax returns had paid amounts reported as the Washington E-911 tax for part of 2003, TracFone stopped further payments. It has not collected the state E-911 excise tax from its subscribers. The Department then assessed TracFone for state E-911 excise taxes for the last quarter of the year and instructed TracFone to begin collecting the monthly tax from its subscribers. TracFone paid the estimated assessment, and then commenced this suit to recover the amounts paid and contest further payments of the tax.

¶ 9 Both parties moved for summary judgment. The trial court granted the Department's motion and dismissed the lawsuit. We granted direct review.

ANALYSIS

¶ 10 This matter is before us for review of the trial court's grant of summary judgment. A court reviews a grant of summary judgment de novo, engaging in the sameinquiry as the trial court. Lallas v. Skagit County, 167 Wash.2d 861, 864, 225 P.3d 910 (2009); Wilson v. Steinbach, 98 Wash.2d 434, 437, 656 P.2d 1030 (1982). Summary judgment is appropriate if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c).

¶ 11 Whether the trial court properly granted summary judgment depends upon the meaning of various statutes providing for assessment and payment of the state E-911 excise tax. Statutory interpretation is a question of law, reviewed de novo. Lake v. Woodcreek Homeowners Ass'n, 169 Wash.2d 516, 526, 229 P.3d 791 (2010).

¶ 12 A court's goal in construing a statute is to determine and give effect to the legislature's intent. Id.; Dep't of Ecology v. Campbell & Gwinn, LLC, 146 Wash.2d 1, 9-10, 43 P.3d 4 (2002). If the statute's meaning is plain on its face, we give effect to that plain meaning as the expression of what was intended. Campbell & Gwinn, 146 Wash.2d at 9-10, 43 P.3d 4. "The plain meaning of a statute may be discerned 'from all that the Legislature has said in the statute and related statutes which disclose legislative intent about the provision in question.' " State v. J.P., 149 Wash.2d 444, 450, 69 P.3d 318 (2003) (quoting Campbell & Gwinn, 146 Wash.2d at 11, 43 P.3d 4). We look to " 'the ordinary meaning of the language at issue, the context of the statute in which the provision is found, related provisions, and the statutory scheme as a whole.' " Lake, 169 Wash.2d at 526, 229 P.3d 791 (quoting State v. Engel, 166 Wash.2d 572, 578, 210 P.3d 1007 (2009)).

¶ 13 TracFone contends that the statutes governing the state E-911 tax ² do not apply to prepaid wireless subscribers.

¶ 14 RCW 82.14B.030(4) (2003) states in part:

A state enhanced 911 excise tax is imposed on all radio access lines whose place of primary use is located within the state in an amount of twenty cents per month for each radio access line. The tax shall be uniform for each radio access line. The tax imposed under this section shall be remitted to the department of revenue by radio communications service companies, including those companies that resell radio access lines, on a tax return provided by the department.

(Emphasis added.) A "radio access line" is "the telephone number assigned to or used by a subscriber for two-way local wireless voice service available to the public for hire from a radio communications service company." RCW 82.14B.020(5). TracFone prepaid wireless is a "two-way local wireless voice service available to the public for hire from a radio communications service company" ³ and the telephone number assigned to/used by a TracFone subscriber is a "radio access line" within the meaning of RCW 82.14B.020(5). RCW 82.14B.030(4) says that the tax must be remitted to the Department of Revenue by radio communications service companies, "including those companies that resell radio access lines." TracFone buys up airtime from other companies and sells it under its own name to its customers, clearly bringing TracFone's business within the scope of the statutes.

¶ 15 RCW...