151 A.3d 497
Me.2016Background
- BCN Telecom operated in Maine (2008–2011) as both a competitive local exchange carrier and an interexchange carrier, billing Maine customers for local and long‑distance services.
- BCN billed a line‑item labeled “PICC: Primary InterExchange Carrier Charge” to certain multi‑line business customers on a per‑line basis regardless of calls made; the charge both reimbursed PICCs BCN paid and produced profit.
- Nationwide, BCN paid $386,802.46 in PICCs but billed customers $6,736,257.78 under the “PICC” label; in Maine BCN billed $825,940.30—substantially more than its PICC costs.
- Maine Revenue Services assessed a 5% service provider tax on BCN’s PICC revenues as part of the sale price of telecommunications services, assessing taxes and interest; administrative appeals and the Board upheld the assessment.
- Superior Court granted BCN’s summary judgment, concluding the PICC charges were not part of the sale price or, alternatively, were exempt as interstate telecommunications sales; the State Tax Assessor appealed to the Maine Supreme Judicial Court.
Issues
| Issue | Plaintiff's Argument (BCN) | Defendant's Argument (Assessor) | Held |
|---|---|---|---|
| Whether BCN’s billed "PICC" charges are included in the statutory "sale price" of telecommunications services | PICC charges are access or passthrough charges, not consideration for telecommunications services, so not part of sale price | The PICC charges were part of the total consideration customers paid for telecommunications services and thus fall within the statutory sale price | Held: PICC charges are part of the sale price and subject to the service provider tax |
| Whether PICC charges are exempt as sales of interstate telecommunications services under the exemption statute | The charges relate to federal PICCs and therefore are sales of interstate telecommunications, qualifying for the exemption | BCN failed to prove that the billed amounts related solely or in identifiable part to interstate services; exemption must be narrowly construed and taxpayer bears burden | Held: BCN did not make a prima facie showing the exemption applied; exemption not established on summary judgment |
| Burden and standard on cross‑motions for summary judgment regarding tax exemptions | BCN: exemption applies as a matter of law | Assessor: unresolved factual issues and BCN must prove exemption; ambiguous statutory reading favors tax authority | Held: Because exemptions are construed narrowly and taxpayer bears burden, BCN’s evidence was insufficient; judgment for BCN vacated |
| Standard of review for Superior Court de novo review of tax appeals | BCN: (implicit) deference to court’s judgment that charges not taxable or were exempt | Assessor: statute’s plain meaning controls; appellate review de novo of Superior Court legal rulings | Held: Court reviews de novo; applied statutory plain meaning to include charges in sale price |
Key Cases Cited
- Camp Walden v. Johnson, 163 A.2d 356 (Me. 1960) (tax statutes construed strictly against government)
- Blue Yonder, LLC v. State Tax Assessor, 17 A.3d 667 (Me. 2011) (standard of review for summary judgment in tax appeals)
- Brent Leasing Co. v. State Tax Assessor, 773 A.2d 457 (Me. 2001) (tax exemptions construed narrowly)
- Robbins v. State Tax Assessor, 536 A.2d 1127 (Me. 1988) (exemptions not extended beyond clear scope)
- Estate of Cabatit v. Canders, 105 A.3d 439 (Me. 2014) (taxpayer bears burden to make prima facie showing of exemption)