Supreme Judicial Court of Maine
State Tax Assessor v. Tracfone Wireless, Inc.
June 23, 20222022 ME 36
Summary
The court held that TracFone’s Lifeline SafeLink service was not “paid for in advance” because federal subsidies were generally reimbursed only after subscribers used the service, so the prepaid wireless fee did not apply. It nevertheless held that the service was sold for consideration because TracFone received payments from USAC, making it subject to the service provider tax during the audit period. The court also held that the statutory notice requirement did not create a defense to the assessment and affirmed denial of TracFone’s motion to compel.
Holding
- Whether SafeLink was paid for in advance for purposes of the prepaid wireless fee.. SafeLink was not paid for in advance because TracFone generally received Lifeline reimbursement only after a subscriber activated and used the service. The prepaid wireless fee therefore did not apply, and summary judgment was required in TracFone’s favor on that issue.
- Whether SafeLink was sold for purposes of the service provider tax when USAC paid TracFone.. SafeLink was sold for consideration and was therefore taxable under the service provider tax, even though payment came from USAC rather than directly from the subscribers and was made after the services were provided.
- Whether subsequent legislative action or legislative history altered the meaning of the service provider tax during the audit period.. The later statutory amendment excluding federal universal service support funds did not change the tax treatment during the audit period because the statute then in effect unambiguously included the consideration received for SafeLink services and contained no exception for government payments.
- Whether TracFone was entitled to discovery concerning the Assessor’s alleged policy change and whether the motion to compel should have been granted.. The trial court did not abuse its discretion in denying the motion to compel because the statutory notice provision did not create a defense to an assessment or impose a consequence that would make the requested documents admissible for that purpose.