Title: State Tax Assessor v. Tracfone Wireless, Inc.

State: maine

Issuer: Maine Supreme Court

Document:

MAINE SUPREME JUDICIAL COURT 
Reporter of Decisions
Decision: 
2022 ME 36 
Docket: 
BCD-21-135 
Argued: 
December 8, 2021 
Decided: 
June 23, 2022 
Panel: 
STANFILL, C.J., and MEAD, JABAR, HORTON, and CONNORS, JJ.* 
STATE TAX ASSESSOR 
v. 
TRACFONE WIRELESS, INC. 
JABAR, J. 
[¶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, 
*  Although Justice Gorman and Justice Humphrey participated in the appeal, both retired before 
this opinion was certified. 
 
2 
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. 
I.  BACKGROUND 
[¶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, 
3 
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
 
4 
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 
1  In 2018, after the audit period, the legislature passed a bill exempting USAC-subsidized services 
from certain fees, including the service provider tax.  See P.L. 2017, ch. 422.  The law’s stated effective 
date was January 1, 2019.  Id. § 12. 
5 
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). 
II.  DISCUSSION 
[¶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.   
A. 
Motion for Summary Judgment 
1. 
Standard of Review 
[¶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 
 
6 
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 (first alteration in original) (quotation marks omitted).
7 
2. 
Prepaid Wireless Fee 
[¶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 
2  Effective January 1, 2019, the Legislature rescinded the applicability of the prepaid wireless fee 
to “prepaid wireless telecommunications service supported by federal universal service support 
funds.”  P.L. 2017, ch. 422, § 1. 
3  Although a fee is not a tax, see Bd. of Overseers of the Bar v. Lee, 422 A.2d 998, 1004 (Me. 1980), 
because 36 M.R.S. § 111(5) (2022) defines a tax as including a “fee . . . subject to collection by the 
[A]ssessor pursuant to statute,” and because 35-A M.R.S. § 7104-C (2022) provides for remittance of 
the prepaid wireless fee to the Assessor, the Assessor’s authority to collect the fee is implicit, and we 
apply the same rules of statutory construction and standard of review for the Assessor’s fee 
determination as its determination regarding the service provider tax. 
 
8 
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). 
[¶15]  We turn first to the “paid for in advance” requirement.  The Federal 
Lifeline program pays ETCs for services after the services are provided.  Under 
the Lifeline program,  
(c) [a]n eligible telecommunications carrier offering a Lifeline
service that does not require the eligible telecommunications 
carrier to assess and collect a monthly fee from its subscribers: 
(1) Shall not receive universal service support for a 
subscriber to such Lifeline service until the subscriber 
activates the service by whatever means specified by the 
carrier, such as completing an outbound call; and 
(2) After service activation, an eligible telecommunications 
carrier shall only continue to receive universal service 
support reimbursement for such Lifeline service provided to 
subscribers who have used the service within the last 
30 days, or who have cured their non-usage . . . . 
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) (“ETCs seeking support 
9 
for low-income service provided in the preceding month shall submit to USAC 
no later than the eighth day of each month [a report supporting their claims] in
order to receive a low-income disbursement at the end of that same month.”). 
[¶16]  Given that TracFone did not charge any SafeLink users for the
service during the audit period,4 TracFone received all Lifeline payments for a 
customer following the consumer’s use of the service.5
By the Lifeline 
program’s plain terms, there is no indication that, under federal law or 
regulation, TracFone would have received payment from USAC prior to 
providing the service.  In that strict sense, the service was not prepaid. 
[¶17]  It is true that TracFone’s SafeLink bears some hallmarks of a 
prepaid plan, such as having no monthly billing relationship with the consumer.  
4  The Assessor argues that “TracFone’s customers also provided certain consideration for 
[SafeLink] . . . before a customer’s service was activated,” and, therefore, the service was paid for in 
advance because of the consideration provided by consumers.  However, for consideration to be 
“valid,” it must be valuable; that is, it must “confer[] a pecuniarily measurable benefit on one party or
impose[] a pecuniarily measurable detriment on the other.”  Valuable Consideration, Black’s Law 
Dictionary (11th ed. 2019).  The taxes and fees were assessed solely against the $9.25 subsidy 
provided to TracFone, so any consideration the consumer provided was valueless and therefore not 
valid under the law.  See id. 
5  The Assessor argues that the record demonstrates instances in which TracFone was paid prior 
to the Lifeline service being activated, and that this renders the entire SafeLink program prepaid.  
Even if we view the record evidence in the light most favorable to the State, see Stewart Title Guar. 
Co. v. State Tax Assessor, 2009 ME 8, ¶ 11, 963 A.2d 169, the regulations still clearly state that USAC 
would reimburse TracFone only after the consumer had activated the SafeLink service.  See 47 C.F.R. 
§ 54.407(c)(1) (2020).  We do not find compelling the argument that the minor corrections TracFone 
made to its filings with USAC, which occasionally led to TracFone collecting, during the audit period,
payment before the user had activated the program, invalidated the entire structure of the Lifeline 
program.   
 
10 
In addition, TracFone had previously described its SafeLink program as 
following a prepaid model.  However, the record contains no evidence of any
consistent practice of payment by USAC to TracFone in advance of TracFone’s
rendering the service being paid for.  See 47 C.F.R. § 54.407(c).  The SafeLink
program, therefore, falls somewhere between a prepaid and postpaid 
telecommunications plan.6 Given that we strictly construe tax statutes against
the taxing entity, see Goggin, 2018 ME 111, ¶ 13, 191 A.3d 341, the SafeLink
plan cannot be considered “paid for in advance.”  Because the SafeLink plan is 
not “paid for in advance,” the prepaid wireless fee does not apply, and, 
therefore, we need not address whether there was a retail transaction or 
whether the Assessor had the authority to audit, assess, and sue TracFone for 
the prepaid wireless fees.  We therefore vacate the court’s grant of a summary 
judgment in favor of the Assessor with respect to the prepaid wireless fee and 
remand for entry of summary judgment in favor of TracFone. 
6  Despite the Assessor’s claim to the contrary, TracFone is not judicially estopped from claiming 
that its Lifeline service is not prepaid.  Judicial estoppel “prohibits parties from deliberately changing 
positions according to the exigencies of the moment” and applies when a party takes positions that 
are “clearly inconsistent” with each other, the party in the previous action “successfully convinced 
the court to accept the inconsistent position” in the previous action, and the party gained an unfair 
advantage due to the change in position.  In re Child of Nicholas P., 2019 ME 152, ¶ 16, 218 A.3d 247
(alteration and quotation marks omitted).  There is no indication that the PUC’s order granting 
TracFone’s ETC status was predicated on it being a prepaid service, meaning, at the very least, that 
TracFone gained no unfair advantage due to any change in its position. 
11 
3. 
Service Provider Tax 
[¶18]  The service provider tax is applied to the value of certain services, 
including “telecommunications” and “ancillary services,” that are sold in 
Maine.7  36 M.R.S. § 2552(1)(E), (L).  The statute provides that “[v]alue is 
measured by the sale price.”  Id. § 2552(2).  The definitions section of the statute
defines “sale price” as follows:
“Sale price” means the total amount of consideration, including
cash, credit, property and services, for which personal property or
services are sold, leased or rented, valued in money, whether
received in money or otherwise, without any deduction for the cost
of materials used, labor or service cost, interest, losses and any
other expense of the seller. “Sale price” includes any consideration
for services that are a part of a sale. 
36 M.R.S. § 2551(15) (2016).  The version of the statute in effect at the time the 
tax was assessed had several exclusions from the definition of “[s]ale price,” 
none of which were applicable here.  See id.  The service provider tax is a “levy 
on the seller” but can be passed to the consumer.  36 M.R.S. § 2552(2).  TracFone 
argues that it is not subject to the service provider tax because no sale occurred, 
7  “Telecommunications services” are defined as “the electronic transmission, conveyance or 
routing of voice, data, audio, video or any other information or signals to a point or between or among 
points.”  36 M.R.S. § 2551(20-A) (2016).  An “ancillary service” is “a service that is associated with or 
incidental to the provision of telecommunications services, including, but not limited to, detailed 
telecommunications billing service, directory assistance, vertical service and voice mail service.” Id. 
§ 2551(1-C).  There is no dispute that TracFone’s SafeLink service was a telecommunications service 
that offered ancillary services during the audited period.   
 
12 
and, even if a sale had occurred, subsequent legislative history indicates that 
the Legislature never intended to subject SafeLink and other Lifeline services 
to taxes and fees.  These arguments are both unpersuasive. 
a. 
The SafeLink Transaction 
[¶19]  A “sale” is “fundamentally an exchange of goods or services for a 
price or consideration.” State Tax Assessor v. MCI Commc’ns Servs., Inc., 2017 
ME 119, ¶ 14, 164 A.3d 952; 36 M.R.S. § 1752(13) (2022) (defining “[s]ale” for 
the purposes of the sales tax as “any transfer, exchange or barter, in any manner 
or by any means whatsoever, for consideration.”).  Sale price can include any 
value received for a retail sale, Flippo v. L.L. Bean, Inc., 2006 ME 62, ¶ 10, 898 
A.2d 942, and can include payments made by third parties, see Apple Inc., 2021 
ME 8, ¶¶ 16-17, 254 A.3d 405; Flippo, 2006 ME 62, ¶¶ 12-13, 898 A.2d 942; Flik
Int’l Corp. v. State Tax Assessor, 2002 ME 176, ¶ 19, 812 A.2d 974.  A sale can 
also occur even when the consideration is not received until a later time.  See 
Flippo, 2006 ME 62, ¶ 16, 898 A.2d 942.  
[¶20]  There is no ambiguity in the statute; it applies to the value of 
telecommunications services sold in Maine.  It is undisputed that TracFone 
received consideration for the services that it provided under the SafeLink
program.  TracFone does not contest that it purchases telecommunications
13 
services for resale.  The mechanics of the process amount to a sale: the user 
signs up for a service and receives minutes from TracFone, and TracFone then 
receives payment from USAC.  There is no requirement that the payment to a
seller must be made by the customer in order for the transaction to be 
considered a retail sale; the sale price may be paid to the seller by a third party 
after the transaction.8 Cf. Apple Inc., 2021 ME 8, ¶¶ 16-17, 254 A.3d 405. For
the above reasons, TracFone’s SafeLink service is “sold” and therefore taxable 
under 36 M.R.S. § 2552. 
b. 
Subsequent Legislative Action 
[¶21]  TracFone argues that, even if SafeLink was “sold” for the purposes 
of the service provider tax, the 128th Legislature’s passage of chapter 422 of 
Public Law 2017, enacted following the audit, demonstrates that the 
Legislature never intended to tax SafeLink and other Lifeline programs.  
TracFone argues that statements made during the 128th Legislature’s passage 
of P.L. 2017, ch. 422, indicate the 128th Legislature’s intention to clarify that 
the 121st Legislature did not intend for the statute providing for the service 
8  In the period at issue, there was no exception for payments from a federal program.  See id. 
§ 2551(15), amended by P.L. 2017, ch. 422, §§ 7-9 (effective Jan. 1, 2019). 
 
14 
provider tax statute to apply to services paid for with federal universal support 
funds.   
[¶22]  As noted, the plain language of the applicable statute clearly stated,
“‘Sale price’ means the total amount of consideration, including cash, credit, 
property and services, for which personal property or services are sold, leased 
or rented, valued in money, whether received in money or otherwise . . . .” 
36 M.R.S. § 2551(15).  There was no exception for government payments.  See 
id. 
[¶23]  The statute was amended by P.L. 2017, ch. 422, § 10, effective 
January 1, 2019, to exclude from the definition of sale price “[f]ederal universal
service support funds that are paid directly to the seller pursuant to 47 Code of
Federal Regulations, Part 54.”  In other words, the transaction at issue here
would now be excluded from the service provider tax.  Because the statute as it 
existed at the time of these events was unambiguous, however, we apply that 
plain language and do not look to legislative history.  See Wawenock, LLC v. Dep’t
of Transp., 2018 ME 83, ¶ 7, 187 A.3d 609 (“If the statute is unambiguous, we 
interpret the statute according to its unambiguous language.”).    
15 
B. 
Motion to Compel 
[¶24]  In the trial court, TracFone sought to invoke 36 M.R.S. § 112(1)
(2022) as a defense, arguing that, when the Assessor assessed the prepaid 
wireless fee and service provider tax against TracFone, it was a change in the 
Assessor’s policy and practices.  In relevant part, 36 M.R.S. § 112(1) provides 
that “[w]hen a significant change has occurred in bureau policy or practice or 
in the interpretation by the bureau of any law, rule or instruction bulletin, the 
assessor shall, within [sixty] days of the change, provide to [a] publishing entity 
or entities written notice, suitable for publication, of the change.”  TracFone 
contends that the Assessor’s decision to assess the service provider tax during 
the audit period amounted to a “significant change,” and, during discovery,
TracFone sought the production of documents that it believed would support 
this contention.9  Because section 112 would have to provide taxpayers a 
9  “[S]ignificant change” is not defined in statute.  See 36 M.R.S § 112 (2022).  The term is used only 
in one other statute in Title 36.  See 36 M.R.S. § 194-A(1) (2022) (“Before implementing a significant 
change in policy, practice or interpretation of the sales and use tax law that would result in additional 
revenue, the State Tax Assessor shall consult with the Office of the Attorney General.”)  The trial court 
assumed that there was a significant change in this case.  TracFone was assessed for the service 
provider tax and, because SafeLink had been operating since March 2010, because the service 
provider tax had been in effect prior to then, see P.L. 2007, ch. 627, § 69 (adding “ancillary services” 
to the service provider tax); P.L. 2003, ch. 673, pt. v, §§ v-25, v-29 (enacting the service provider tax), 
and because the service provider tax had assumedly not been assessed for that prior period, there 
likely was a significant change in regard to the service provider tax.  
 
16 
defense for the documents to be admissible in evidence, we first address section 
112’s meaning and application.  
[¶25]  The plain language of section 112 provides neither any defense for 
those who have been affected by the Assessor’s actions (or lack thereof) nor 
any consequence for the Assessor should it fail to comply.  See Bureau v. Staffing 
Network, Inc., 678 A.2d 583, 590 (Me. 1996) (“We do not create a remedy or
penalty when a statute is silent regarding the sanction for failure of an agency 
to timely act.”).  Section 112(1) is not mere surplusage, however, because 5 
M.R.S. § 11001(2) (2022) permits taxpayers “aggrieved by the failure or refusal 
of an agency to act” to seek relief in the form of a court order requiring the 
agency—here the Assessor—to act. 
[¶26]  We reject TracFone’s argument that, because 36 M.R.S. § 194-A(4)
(2022) expressly provides that the Assessor’s failure to take a different
procedural step within a certain period provides no defense,10 a defense is 
10  The statute reads: 
1. Consultation.  Before implementing a significant change in policy, practice or 
interpretation of the sales and use tax law that would result in additional revenue, 
the State Tax Assessor shall consult with the Office of the Attorney General. 
. . . .  
4. Assessment validity.  This section establishes a procedural consultation and 
notification requirement to assist routine legislative oversight and does not affect 
the validity of any assessment or tax liability issued pursuant to or arising under 
this Title. 
17 
impliedly found in section 112.  If we were to invalidate the acts of the Assessor 
for not complying with section 112, we would be reading language into section 
112(1) that does not exist.  See Bureau, 678 A.2d at 590.  Additionally, if we
were to interpret the absence of language like that found in section 194-A(4) to 
mean that section 112(1) provided a defense, any law that did not state 
otherwise and used the term “shall” could then be used as a defense. See, e.g., 
36 M.R.S. § 1760-D(1) (“The assessor shall post on the bureau’s publicly 
accessible website, and update quarterly, a list of products . . . to which the 
assessor has made a written determination on the applicability of a sales tax 
exemption.”).  Because TracFone’s section 194-A argument would require us to 
read language into a law and would have broad implications on Maine’s tax 
code, we reject this argument.   
[¶27]  Because section 112 does not provide TracFone a defense, the trial 
court did not abuse its discretion in denying TracFone’s motion to compel the 
production of the documents. 
The entry is: 
Summary judgment in the Assessor’s favor on 
the prepaid wireless fee vacated.  Remanded for 
entry of summary judgment in TracFone’s favor.  
Summary judgment in the Assessor’s favor on
36 M.R.S. § 194-A. 
 
18 
the service provider tax affirmed.  Denial of 
TracFone’s motion to compel affirmed. 
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 
Business and Consumer Docket docket number AP-2019-1 
FOR CLERK REFERENCE ONLY