MAINE	SUPREME	JUDICIAL	COURT Reporter	of	Decisions Decision: 2016 ME 165 Docket: Ken

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- 541 Argued: September	13,	2016 Decided: November 8 ,	2016 Panel: SAUFLEY,	C.J. ,	and	ALEXANDER , MEAD, GORMAN,	JABAR , HJELM, and HUMPHREY, JJ.

BCN	TELECOM,	INC.

v . STATE	TAX	ASSESSOR

SAUFLEY,	C. J. [¶1] The	State	Tax	Assessor appeals	from a summary judgment entered by the	Superior	Court (Kennebec	County, Murphy,	J. ) in	favor	of	BCN	Telecom, Inc.,	 on	 BCN’s appeal	 from the assessment of a state service	 provider ta x , 36 M.R.S.	 §	2552(1)(E)	 (2011 ), 1 on certain flat charges that	BCN imposed	on

some business customers ’	 lines from	 March	 2008	 to	 October	 2011

. The charges	 were designed	 in	 part	 to reimburse	 BCN	 for presubscribed interexchange	 carrier	 charges	 (PICCs) 2 that it	 paid	 to	 access	local	 telephone infrastructure , and	 in	 part	 to	 generate	 profits

. W e	 agree	 with	 the	 Assessor

1 Although	the	parties	agree	that	the	procedure	in	this	matter	was	governed	by	the	provisions	of Title	36	that	are	currently	in	effect, see 36	M.R.S.	§§ 151 , 151

- D (2015) , the	substantive	statutes	that we	have	been	asked	to	construe	are	those	that	were	in	effect during the	audit	period.

2 For	 the	 reader’s	 ease	 in	 this	 matter,	 which	 involves	 multiple	 abbreviations,	 “PICC”	 is pronounced	“pixie”	in	the	telecommunications	indust ry.2 that (A) the	amounts	 received	 by	BCN	were	 subject	 to	 the	 tax as	part	 of	 the sale	 price	 for	 telecommunications	 services, and (B) BCN failed	 to	 pr ov id e prima	 facie	 proof that the tax exemption for	 interstate	 telecommunications
services ,	36	M.R.S.	§ 2557(34)	(2011 ), applied	to	these	charge s .		Accordingly , we	vacate	the	judgment entered	by	the	Superior	Court

. I. STANDARD	OF	REVIEW [¶ 2 ]		This	matter was	decided	by	 the	Superior	Court	on cross - motion s for	 summary	 judgment. The	 court considered	 the	 matter de	 novo, see 36 M.R.S.	§	151

- D(10)(I)	(2015) , 3 and	we	review	the	decision	of	the	court	on appeal.	 	 In	 considering	 an	 appeal	 from	 a	 summary	 judgment,	 w e	 review	 de novo	whether	there	was	no	genuine	issue	of	material	fact	and	either	party	was entitled	to	judgment	as	a	matter	of	law. See M.R.	Civ.	P.	56(c) ; Blue	Yonder,	LLC
v.	State	Tax	Assessor ,	2011	ME	49,	¶	7,	17	A.3d	667 .		 In	interpreting	statutes,

we give	 effect	 to	 the	 Legislature’s	 intent	 as	 expressed	 in	 the	 statutes’	 plain meaning. Scott	Paper	Co.	v.	State	Tax	Assessor ,	610	A.2d	275,	277	(Me.	1992)

. Because	 the	Superior	Court	was	authorized	 to	rule	on	legal	matters	de	novo,

see 36 M.R.S.	§	151

- D(10 )(I),	we	review	the	court’s	interpretation	directly	and

3 “ The	court	shall	make	its	 own	determination	as	 to	all	questions	 of	 fact	 or	law,	 regardless	 of whether	the	questions	of	fact	or	law	were	raised	before	the	division	within	the	bureau	making	the original	determination	or	before	the	board. ”		36	M.R.S.	§ 151

- D(10)(I)	(2015).3 do	not	defer	to	the	Tax	Assessor’s	interpretive	rulings. 4 See	Blue	Yonder,	LLC , 2011	ME	49,	¶¶	6

- 7,	17	A.3d	667.
II.		BACKGROUND [¶3 ]	 	 The	 following	 facts	 are	 drawn	 from	 the	 parties’	 statements	 of

ma terial	 facts	 and	 their	 stipulated	 facts	 and	 exhibits. During	 the	 relevant audit	period	of	March	1,	2008,	to	October	31,	2011, BCN	functioned in	Maine both	as	a competitive	local	exchange	carrier	(CLEC) , supplying	local	telephone
service , and	 an	 interexcha nge	 carrier	 (IXC) , provid ing long

- distance	 service between	 exchange	 areas. BCN	 charged	 a	 monthly rate	 for	 local	 calls	 and	 a
per - minute	rate	 for	interstate	and	intrastate	long

- distance	calls. BCN	had	no employees stationed in	 Maine but resold	 telecommunic ations	 services	 to business	and	residential	customers	in	Maine	 for	both	local	and	long

- distance
service s . [¶4 ] In	its	 role	as	an	 IXC,	BCN	was,	in	 some	instances,	charged PICCs, which	are	 fees	or	end

- user	charges	that	a local	exchange	carrier may	impose to	recover	a	portion	of	the	interstate	local	loop	cost	from	an	IXC

. See 47	C.F.R.

4 Cf. SST	&	S,	Inc.	v.	State	Tax	Assessor ,	675	A.2d	518,	521	(Me.	1996) (stating,	before	36	M.R.S. § 151

- D(10)(I)	(2015)	was	enacted,	that	“absent	language	in	the	statute	making	the	interpretative ruling	 of	 the	 Assessor	 contrary	 to	 t he	 expressed	 legislative	 purpose,”	 we	 would	 defer	 to	 the Assessor’s interpretive ruling).4 §	 69.153	 ( 2014 )

. 5 Thus,	 IXCs like	BCN pay	 PICCs	 to local	exchange	 carrier s , whether	 they are incumbent	local	exchange	 carriers	 (ILECs),	which	 own	 the actual	 infrastructure of	 local	 loops,	 or	 CLECs,	 which	 compete	 with	 ILECs	 in providing	local	services

. See	id. PICC s are capped	by	federal	regulations, but the	 amount	 charged	 by	 a local	 exchange	 carrier up	 to	 that	 cap	 is in	 the carrier’s discretion. See 47 C.F.R.	69.153(a),	( e). [¶5 ] BCN’s	 bills	 to	 its	 customers	 included	 a	 line	 item	 that	 it	 labeled, “PICC :	 Primary	 InterE xchange	 Carrier	 Charge .” T he	 charges that it thereby imposed	on	customers were not,	 themselves,	PICCs ,	which are,	by	definition, paid by	IXCs as	long	as	cust omers,	like those	of	BCN ,	have	selected	an	IXC

. See
47 C.F.R.	 §	 69.153(a) ,	 (b)

. Thus,	 the	 charge	listed	 on	 the	 customers ’	 bills	 by
BCN was more	in	the	nature	of	a	pass

- through	charge,	although,	as described below,	 the	 charge significantly exceed ed the	 co sts	 incurred	 by	 BCN

. BCN imposed	 its	 “PICC”	 charges on those business	 customers with multiple long

- distance	 lines that did not	 negotiate with	 BCN	 to	 avoid paying	 the charges

. BCN did	so in	part to recover	PICCs	that	it	had	paid	to local	exchange
carriers and in	part to realiz e a profit.

5 A	 local	 exchange	 carrier	 may	 recover	 a	 PICC from	 the	 end user only if	 the	 customer	 is	 not presubscribed	to	an	IXC

. See 47	C.F.R.	§	69.153 (b) ( 2014 )

.5 [¶6 ] BCN limited	 the	 charges that it	 imposed to an	 amount	 not exceeding	 the	 maximum	 PICC	 authorized	 for	 a local	 exchange	 carrier to charge	an	IXC	by	federal	regulation. See 47 C.F.R.	69.153 (a) ,	(e)

. BCN’s	“PICC” charg es	were	imposed	 on	 a	 per

- line,	 not	 a	 per

- call,	 basis ,	 and were charged whether	or	not	any	long

- distance	calls	were	made

. Even if	all of	a	customer’s long

- distance	calls	were in

- state	calls ,	BCN	imposed	the	charge

. [¶7 ] Nationwide, BCN ,	 in	 its	 capacity as an	 IXC, paid a	 total	 of $386,802.46	in	PICCs	to local	exchange carriers	during	the	period	established for	the	audit

. It	then charged	its	customers $6,736,257.78 , nationwide , in	fees that	it	designated “PICC” in	its	bills

. In	Maine	alone, BCN	charged $ 825,940.30 to	customers	under	this	“PICC”	designation , more	than	double	the	amount	of the	costs	it	incurred	on	a nationwide basis. [¶8 ] Maine	 Revenue	 Services determined	 that	 BCN’s “PICC” revenues

were subject	 to	a	service	provider	 tax	as	part	of BCN’s sale	price	 for	in

- state “[t]elecommunications	 services.”	 	 36 M.R.S.	 §§ 2551(15), 2552(1)(E), 2557 (34)	 (2011 ). BCN	 was	 assessed	 $41,296.96	 in	 taxes	 and	 $7,778.60	 in
interest. BCN	sought	reconsideration, see 36	M.R.S.	§ 151 (2) (2015),	and	the Sales	 and	 Use Tax	 Division of	 Maine	 Revenue	 Services affirmed	 the

assessment. BCN	 sought	 review	 of the reconsidered decision by	 filing	 a6 written	statement	of	appeal	with	 the	Maine	Board	of	Tax	Appeals	in	October
2012. See 36	 M.R.S.	 §	 151(2) (E), (F)(1)	 (2015)

. T he	 Bo ard	 affirmed the imposition	of	the	tax

. See 36	M.R.S.	§ 151

- D (10)(I). [¶9 ] BCN	filed	a	timely	petition	for	review	of	final	agency	action	in	the Superior	Court. See id. ; M.R.	Civ.	P.	80C

. The	parties	conducted	discovery	and, at	 the	direction	of	 the	co urt, entered	a	joint	stipulation	of	 facts	and	exhibits. The	 parties	 filed	 cross

- motions	 for	 summary	 judgment with statements	 of material	 facts	 and	 supporting	 materials

. After	 considering	 the	 parties’ submissions,	 t he	 court	 granted	 BCN’s	 motion	 for	 summar y	 judgment , concluding that	 BCN’s	 charges	 were	 not	 part	 of	 the	 “sale	 price”	 of
telecommunications	 services ,	 36	 M.R.S.	 §§	 2551(15),	 2552(2) (2011) , and that,	 even	 if	 they	 were,	 they	 were	 exempt	 from	 taxation	 because	 they	 were charges	 for interstate telecomm unications	services. The	Assessor	appeals	 to

us. See 14 M.R.S.	§	1851	(2015) ; M.R.	App. P.	2

. I I I.		DISCUSSION
A. Applicability	of	Service	Provider	Tax [¶1 0 ]		“ Statutes imposing	taxes	are	construed	most	strongly	against	the government and	in	the	citize n ’ s	favor	and	may	not	be	extended	by	implication beyond	the	clear	import	of	the	language	used.” Camp	Walden	v.	Johnson ,	1567 Me.	 160,	 165,	 163	A.2d	 356	 (1960) ; see	 also Capitol	 Bank	&	 Tr.	 Co.	 v. City	 of
Waterville ,	343	A.2d	213,	218	(Me.	1975) (“[T]ax	stat utes	are	to	be	construed strictly	against	the	taxing	authority.”)

. During	the	audit	period,	t h e	statute	at issue	 here	 provided , “A	 tax	at	 the	 rate	 of	 5%	is	imposed	 on	 the	 value	 of	 .	 .	 . [t]elecommunications	 services ” sold	 in	 Maine. 36	 M.R.S.	 § 2552(1)(E)

. 6 “Value	is	measured	b y	the	sale	price.”		36	M.R.S.	§ 2552(2)

. [¶1 1 ] As	 it	 applies	 here, “‘ [s] ale	 price’ means	 the total	 amount	 of consideration ,	 including	 cash,	 credit,	 property	 and	 services,	 for	 which

.	 .	 . services	 are	 sold

.	 .	 . without	 any	 deductio n	 for	 the	 cost	 of	 materials	 used, labor	 or	 service	 cost,	 interest,	 losses	 and	 any	 other	 expense	 of	 the	 seller. ”
36 M.R.S.	§	2551(15) (emphasis	added)

. “Sale	price” is	specifically	defined	to include “ any	 consideration	 for	 services	 that	 are	 a	 part	 of	 a	 sa le. ” Id.
T elecommunications	 services,	 at	 issue	 here, were 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)	(201 1 ). 7

6 The	 tax	 ra te	 has	 since	increased	 to	 six	 percent. See P.L.	 2015,	 ch. 267,	 §	 TTTT

- 3	 (effective January	1,	2016)	(codif ied	at	36	M.R.S.	§	2552(1)	(2015 )).

7 The statute differed	 slightly at	 the	 start	 of	 the	 audit	 period,	 defining	 “ [ t ] elecommunications services”	to	in clude ,	in	relevant	part, “[t]he	provision	of	2

- way	interactive	communications	through the	 use	 of	 telecommunications	 equipment,	 exclusive	 of	 mobile	 telecommunications	 services.” 36 M.R.S. § 2551(20) (A)(1) (2007 ).8 [¶1 2 ] We	 conclude,	 based	 on	 the plain	 language	 of	 the	 statute ,	 that
BCN ’s “PICC” charges to	 its	 Maine	 customers were included	 in	 the	 “tot al amount	 of	 consideration,”	 36 M.R.S.	 § 2551(15),	 that the multiple

- line business customers	paid to	BCN for	 tele communications	 services. See Camp Walden ,	156	Me.	at	165 ,	163	A.2d	356

. Although BCN	argues	that	the “PICC” charges we re access	 charges

— not	 consideration	 for	 actual telecommunications	 services

— BCN	 did	 not	 require	 all multi

- line	 business
customers to	pay these	charges to	access	services , and	the	charges	were	part of	the	total	compensation	paid	for	telecommunication	services

. See 36 M.R.S. §	 2551(15). BCN	 could	 have taken	into	 account	its	 need	 to	 cover	 costs	 and

earn	a profit through its ordinary	rate

- set ting	process, and there was nothing about	the	“PICC”	charge	that distinguished it as anything	other	than	a	charge for	 telecommunications	 services

. 8 Thus,	 whether	 or	 not	 federal	 regulators preclude d or	 allowed BCN’s	 billing	 practice, Maine’s	 statutes broug ht the “PICC”	charge imposed	on	Maine	customers	during	the	audit	period	within	the sale	price	of	telecommunications	services. See id. B ased on the	language	used

8 Cf. Indoor	Billboard/Wash.,	Inc.	v.	Inte gra	Telecom	of	Wash.,	Inc. ,	170	P.3d	10,	19	(Wash.	2007) (concluding	 that	 a	 carrier	 that	 “ labeled	 the	 surcharge	 it	 imposed	 on	 local	 business	 service customers	a PICC”	had	committed	an	unfair	or	deceptive	act	or	practice	because	“ the	term	PICC	had the	 capac ity	 to	 deceive	 a	 substantial	 portion	 of	 the	 public	 into	 thinking	 the	 surcharge	 was	 FCC regulated	and	require d”).9 by	the	Legislature,	the	charges were subject	to the	service	provider tax , see 36 M.R.S.	§ 255 2(1)(E), unless an	exemption	applied

. B. Exemption	for	Interstate	Telecommunications	Services [¶1 3 ]		When	a	tax	exemption	is	being	interpreted,	it	must	be	“construed narrowly.” Brent	Leasing	Co.	v.	State	Tax	Assessor ,	2001	ME	90,	¶	15,	773	A.2d 457 .	 	 “[A] n	 exemption	 from	 taxation,	 while	 entitled	 to	 reasonable interpretation	 in	 accordance	 with	 its	 purpose,	 is	 not	 to	 be	 extended	 by application	to	situations	not	clearly	coming	within	the	scope	of	the	exemption provisions.” Robbins	 v.	 State	 Tax	 Assessor ,	 536 A.2d	 1127,	 1128	 (Me.	 1988) (quotation	 marks	 omitted).	 	 To	 the	 extent	 that	 the	 applicability	 of	 the exemption	 cannot	 be	 determined	 on	 the	 facts	 provided on	 summary judgment ,	the	matter	must	be	resolved	in	favor	of	the	Assessor	because	“[t]he bur den	 of	 proof is	 on	 the	 taxpayer, ” 36	 M.R.S.	 §	 151

- D(10)(I), which must make	a	prima	facie	showing	of	the	applicability	of	the	exemption	for	its	claim to	 survive	 the	 cro ss - motions	 for	 summary	 judgment

. Estate	 of	 Cabatit	 v.
Canders ,	 2014	ME	 133,	 ¶	 8,	 105	A.3d	 439 ; Kond aur	 Capital	 Corp.	 v.	Hankins , 2011	ME	82,	¶	17,	25	A.3d	960

. [¶1 4 ]	 	 The exemption	 at	 issue	 here	 applied to	 “[s]ales	 of	 interstate
telecommunications	 service .”	 	 36	M.R.S.	 §	 2557(34) .	 	 Although	 the	 PICC	is	 a10 creature	of	federal	law that	is	chargeable	to	an	I XC, see 47	C.F.R.	§	69.153, BCN has	 offered	 no	 evidence	 to	 demonstrate	 that the charge s that	 it	 imposed in fact	 related	 onl y	 to	 interstate	 telecommunicati o n s	 services. Given	 that the charges paid	 by	 multi

- line	 business	 customers in	 Maine far	 exceeded	 what
BCN paid in	PICCs	nationwide,	however,	we	can	be	certain	that	not	all	of	the revenues	 it	 received	 from Maine customers	 arose	 from	 PICCs	 related	 to
interstate	 service. BCN	 has	 not,	 on	 th e record supplied ,	 met	 its	 burden to make a	prima	facie	showing that all

— or any identified portion

— of	t he	“PICC” charges that	it	imposed	on	Maine	customers arose	from	the	sale	of	interstate telecommunications	 service s	in	Maine

. Accordingly, the	 stipulated	 facts	and summary	 judgment	 record,	 although	 undisputed, do	 not estab lish	 the applicability	 of	 the	 tax	 exemption as	 a	 matter	 of	 law

. See 36 M.R.S. § 151

- D(10)(I). The	entry	is: Judgment vacated.		Remanded	for	the	entry	of	a judgment	affirming	the	decision	of	the	State	Tax Assessor.11

On	the	briefs: Janet	 T. Mills,	 A ttorney	 General,	 and	 Kimberly	 L. Patwardhan,	Asst.	Atty.	Gen.,	Office	of	the	Attorney	General, Augusta,	for	appellant	State	Tax	Assessor Michael	 L.	 Sheehan,	 Esq.,	 and	 Michael	 S.	 Smith,	 Esq.,	 Preti Flaherty	 Beliveau	 &	 Pachios,	 LLP,	 Portland,	 and	 John	 W. Su llivan	III,	Esq.,	Sullivan	&	Associates,	P.C.,	New	York,	New York,	for	appellee	BCN	Telecom,	Inc.
At	oral	argument: Kimberly	L.	Patwardhan,	Asst.	Atty.	Gen.,	for	appellant	State Tax	Assessor John	W.	Sullivan	III,	Esq.,	for	appellee	BCN	Telecom,	Inc.

Kennebec	County	Superior	Court	docket	number	AP

- 2013

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