* Assurance Wireless Usa, Appellant V. State Of Wa Dept Of Revenue, Respondent

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
ASSURANCE WIRELESS, USA, LP,
f/k/a VIRGIN MOBILE USA, LP,
Appellant,
v.
STATE OF WASHINGTON
DEPARTMENT OF REVENUE,
Respondent.
No. 83089-9-I
DIVISION ONE
PUBLISHED OPINION
BIRK, J. — Assurance Wireless is a telecommunications provider that
participates in the Federal Communications Commission (FCC) “Lifeline” program,
which is intended to aid qualifying low-income consumers in obtaining
telecommunications services. The Washington State Department of Revenue
(Department) assessed retailing business and occupation (B&O) taxes and sales
taxes on funds Assurance received from the Universal Service Administrative
Company (USAC) for its participation in the Lifeline program. Assurance appealed
this assessment to the Board of Tax Appeals (Board), asserting that its receipt of
funds from USAC is not associated with any retail sale as defined under
Washington tax law, and, alternatively, that the taxes are unconstitutional because
they fall on the federal government or an instrumentality of the federal government.
The Board granted summary judgment to the Department. We agree there are no
genuine issues of material fact and affirm the Board’s determinations that a taxable
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No. 83089-9-I/2
2
retail sale occurred and that the tax does not fall on the federal government or an
instrumentality of the federal government.
I
Assurance Wireless USA LP is a telecommunications company that
provides wireless telecommunications services to consumers in Washington and
elsewhere, including Lifeline services. Lifeline is a federal program that is
designed to make telecommunication services more affordable for qualifying low-
income consumers. The FCC prescribes the minimum services that an eligible
carrier must offer and regulates other aspects of the program, including consumer
eligibility requirements. The Assurance Lifeline plan provides eligible consumers
a free wireless phone and free monthly services that consist of a fixed amount of
voice minutes, text messages, and data. A subscriber can purchase additional
voice or text services if they desire a greater level of service than the baseline
monthly plan.
The Lifeline program is administered by the USAC. USAC is “a not-for-
profit, independently, wholly-owned subsidiary of the National Exchange Carrier
Association, Inc.” The record discloses that according to its website, “USAC is not
a federal government agency or department or a government controlled
corporation.” USAC collects funds from telecommunications carriers, which are
required by federal law to make contributions to the Universal Service Fund (USF)
supporting the Lifeline program and other universal service programs. See 47
U.S.C. § 254(d) (“Every telecommunications carrier that provides interstate
telecommunications services shall contribute, on an equitable and
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No. 83089-9-I/3
3
nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms
established by the [FCC] to preserve and advance universal service.”). USAC
administers the collection and disbursement of the USF funds. Id. The
Congressional Budget Office treats USF funds as federal funds, though they are
not federally-appropriated. 47 U.S.C. § 254(d); 47 C.F.R. § 54.706; Tex. Office of
Pub. Util. Couns. v. Fed. Commc’ns Comm’n, 183 F.3d 393, 427 (5th Cir. 1999);
In re LAN Tamers, Inc., 329 F.3d 204, 206 (1st Cir. 2003).
To receive reimbursements, Assurance must file FCC form 497. The form
requires Lifeline providers to report the number of Lifeline subscribers as of the
first day of the month. Assurance receives a reimbursement of $9.251 for each
non-Tribal subscriber2 who has used the service within the last 30 days, a
reimbursement rate established by federal law. 47 C.F.R. § 54.403(a)(1). To
receive Lifeline funds, Assurance must attest:
I certify that my company will pass through the full amount of all Non-
Tribal and Tribal federal Lifeline support for which it seeks
reimbursement, as well as all applicable intrastate Lifeline support,
to all qualifying low-income subscribers by an equivalent reduction in
the subscriber’s monthly bill for voice telephony service, or by
offering a pre-paid wireless plan that includes a set number of
minutes of use per month.
1 This was the rate set by FCC regulation at the time of the proceedings
before the Board. 47 C.F.R. § 54.403(a)(1). In its response in opposition to the
Department’s motion for summary judgment, Assurance notes that “Prior to
September 2012, the reimbursement price was not fixed for all subscribers, and
[Assurance] was receiving reimbursements of $9.79 per subscriber.”
2 Telecommunications companies receive reimbursement of $25.00 for
each Tribal subscriber. 47 C.F.R. § 54.403(a)(3). Assurance does not provide
Lifeline service for Washington Tribal residents.
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No. 83089-9-I/4
4
(Emphasis added.) Assurance implements a business rule to exclude 2 percent
of the total number of its Lifeline recipients in each state when submitting its
attestation, to ensure that it does not claim more Lifeline funds than it is entitled to
receive.
The Department audited Assurance’s excise tax records for the period of
January 2010 through December 2016 and issued assessments for B&O taxes,
retail sales taxes, and interest. Assurance paid the assessments and sought
refunds of $3,895,840 in taxes together with associated penalties and interest.
Assurance appealed to the Department’s Administrative Review and Hearings
Division for review of the assessment. The Department denied Assurance’s
petitions and upheld the assessments. Assurance timely appealed the
assessments to the Board.
The Department moved for summary judgment, arguing that the issues
raised by Assurance were questions of law, not fact, and that the assessments
should be upheld. The Board granted the Department’s motion for summary
judgment. The Board concluded that “the items that [Assurance] claims are
material facts in dispute are actually legal arguments, and that there [were] no
material facts in dispute.” The Board concluded that “[t]here is no preemption that
prohibits the state from applying its generally applicable retail sales tax to the sale
of telecommunication services to consumers in Washington, even if the buyer is a
third party.” Assurance appeals, arguing that the evidence created “questions of
fact” concerning whether there is any taxable “retail sale” involved in providing
Lifeline plans to consumers. Alternately, Assurance argues Lifeline program funds
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No. 83089-9-I/5
5
are immune from state tax under the supremacy clause of the United States
Constitution.
II
This court reviews an order granting summary judgment de novo. Young v.
Key Pharms., Inc., 112 Wn.2d 216, 226, 770 P.2d 182 (1989). We review the
evidence in the light most favorable to the nonmoving party, here, Assurance. Id.
Summary judgment is appropriate where the written record shows there is no
genuine issue as to any material fact, and the moving party is entitled to judgment
as a matter of law. Blaise v. Underwood, 62 Wn.2d 195, 199, 381 P.2d 966 (1963).
A material fact is one upon which the outcome of the litigation depends. Haines-
Marchel v. Dep’t of Corr., 183 Wn. App. 655, 662, 334 P.3d 99 (2014). In a
summary judgment motion, the moving party bears the initial burden of showing
the absence of any issue of material fact. LaPlanie v. State, 85 Wn.2d 154, 158,
531 P.2d 299 (1975). To defeat a motion for summary judgment, the nonmoving
party must, by affidavits or as otherwise provided in CR 56, set forth specific facts
establishing a genuine issue for trial. Young, 112 Wn.2d at 225-26.
Here, the parties do not dispute the material facts or the reasonable
inferences that can be drawn from them. There is no dispute about the process
through which Lifeline services are provided and the Lifeline funds are received.
Assurance bears the burden to prove that it is entitled to the tax refund it is
claiming. Everi Payments, Inc. v. Dep’t of Revenue, 6 Wn. App. 2d 580, 590, 432
P.3d 411 (2018). The issue before us is whether the Board correctly determined
that Assurance had not met its burden to prove it is entitled a tax refund, which is
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No. 83089-9-I/6
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a question of law that we review de novo. See Bravern Residential II, LLC v. Dep’t
of Revenue, 183 Wn. App. 769, 776, 334 P.3d 1182 (2014). Statutory
interpretation is a question of law that we review de novo. Ekelmann v. City of
Poulsbo, 22 Wn. App. 2d 798, 807, 513 P.3d 840 (2022).
A
A person3 making retail sales in Washington is subject to retailing B&O tax
and is also required to collect retail sales tax, unless an exemption applies. RCW
82.04.220; RCW 82.08.020, .050(1). The retailing B&O tax is imposed on the
seller as a percentage of a business’s gross receipts, and the retail sales tax is a
percentage of the selling price on each retail sale. RCW 82.04.250; RCW
82.08.020. The retail sales tax must be paid by the buyer to the seller, and the
seller must collect the full amount of tax payable. RCW 82.08.050. If the seller
fails to collect the tax, whether as the result of the seller’s own acts or the result of
acts or conditions beyond the seller’s control, the seller is personally liable to the
state for the amount of the tax. RCW 82.08.050(3).
A “retail sale” is the sale of tangible personal property to all persons, unless
it is a sale that qualifies for an exception. RCW 82.04.050(1)(a). Under RCW
82.04.050(5), retail sales include providing “telecommunications service.”
“Telecommunications service” is defined as “the electronic transmission,
conveyance, or routing of voice, data, audio, video, or other information or signals
to a point, or between or among points.” RCW 82.04.065(27). “Prepaid wireless
3 RCW 82.04.030 defines “person” to include any “firm, copartnership, joint
venture, club, company . . . limited liability company, association . . . or any group
of individuals acting as a unit.”
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No. 83089-9-I/7
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calling service” is a telecommunication service that “provides the right to use
mobile wireless service as well as other nontelecommunication services . . . which
must be paid for in advance and that is sold in predetermined units or dollars of
which the number declines with use in a known amount.” RCW 82.04.065(22).
Both mobile wireless services and prepaid wireless calling services are considered
telecommunications services. WAC 458-20-245(103)(a) (Table A).
The “gross proceeds” of a retail sale includes the “value proceeding or
accruing from the sale of tangible personal property . . . and/or for other services.”
RCW 82.04.070. “Selling price” for purposes of the sales tax includes
“consideration received by the seller from a third party” if four conditions are met:
(i) the seller actually receives consideration from a party other than the purchaser,
and the consideration is directly related to a price reduction or discount on the sale,
(ii) the seller has an obligation to pass the price reduction or discount through to
the purchaser, (iii) the amount of the consideration attributable to the sale is fixed
and determinable by the seller at the time of the sale of the item to the purchaser,
and (iv) one of three additional criteria is met. RCW 82.08.010(1)(c)(i)-(iv).
Relevant here, the fourth element is met when the purchaser identifies himself or
herself to the seller as a member of a group or organization entitled to a price
reduction or discount. RCW 82.08.010(1)(c)(iv)(B).
Assurance argues that there are two separate transactions that facilitate its
providing Lifeline services and that neither of these transactions is a “sale” under
Washington law. Assurance argues that, in what it calls “business activity 1,” it
provides free services to Lifeline consumers and, because Assurance receives no
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No. 83089-9-I/8
8
consideration from the consumer, there is no sale at that stage. Assurance then
argues that, in what it calls “business activity 2,” “[d]ivorced from the consumer’s
enrollment and use of the prepaid telecommunication services” Assurance
receives Lifeline payments from USAC as “an incentive to encourage participation
in Lifeline.” Presumably because there is no service provided to any person in the
receipt of funds that Assurance describes as “business activity 2,” Assurance
argues it also is not a sale.
The language of FCC form 497, required under federal law, shows there is
a retail sale occurring under Washington law, and undermines Assurance’s
assertion that funds are an incentive unrelated to the consumer’s use of Lifeline
services. Assurance certifies on FCC form 497 that it will pass through the full
amount of Lifeline funds received either by reducing a qualifying subscriber’s bill,
or by providing a prepaid wireless plan. Congress expected that Lifeline funds
would be applied to the consumer’s bill, which presupposes a sale, or toward
providing a prepaid wireless plan, which also falls under the definition of a retail
sale according to Washington law. RCW 82.04.050(5), RCW 82.04.065(21).
Federal law describes the Lifeline program as a “retail service offering” that is
provided to qualifying low-income consumers. 47 C.F.R. § 54.401(a)(1). The
funds Assurance receives from USAC are based directly on the number of
qualifying Lifeline plans that Assurance certifies it is providing. See Nat’l Lifeline
Ass’n v. Fed. Commc’ns Comm’n, 983 F.3d 498, 503 (D.C. Cir. 2020) (explaining
that under both the monthly fee-for-service structure and the prepaid plan structure
carriers “receive Lifeline support payments for their active Lifeline subscribers.”).
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No. 83089-9-I/9
9
Instead of there being two unrelated activities, the amount of Lifeline funding
Assurance receives is directly tied to the number of Lifeline plans it provides. That
Assurance may voluntarily reduce this number, and that there is some time period
between the time when Assurance provides Lifeline service and the time it receives
funds from USAC do not, separately or together, attenuate the connection between
these two “activities” such that there is no retail sale as defined by Washington tax
law.
The Department argues that Assurance is selling telecommunications
services in a three party transaction, rather than engaging in two nonsale business
activities. It argues Assurance is the seller, USAC is the buyer, and the user of
lifeline services is the consumer. Washington law recognizes that a retail sale may
occur when the seller receives consideration from a third party. RCW
82.08.010(1)(c)(i)-(iv). In Murray v. State, the court explained that the “buyer” is
the person “legally obligated to pay the seller in any transaction.” 62 Wn.2d 619,
624, 384 P.2d 337 (1963). In AARO Medical Supplies, Inc. v. Department of
Revenue, the court stated that “ ‘consumers’ ” and “ ‘buyers’ ” are not statutory
equivalents in Washington. 132 Wn. App. 709, 718 n.5, 132 P.3d 1143 (2006)
(quoting Murray, 62 Wn.2d at 623). In AARO, vendors sold durable medical
equipment to Medicare beneficiaries and were paid by the federal government via
assignment. Id. at 711-12. The vendors did not collect sales tax on the
transactions. Id. at 712. The court held that “for the purposes of RCW 82.08.050,
the Medicare beneficiaries, not the federal government, [were] the buyers.
Because RCW 82.08.050 require[d] a vendor to remit sales tax to the Department,
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No. 83089-9-I/10
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regardless of whether the vendor collect[ed] the sales tax from the purchaser,”
summary judgment in favor of the Department was appropriate. AARO, 132 Wn.
App. at 711.
Here, there is no disagreement about whether Assurance is providing
telecommunications services to Washington consumers. Under Washington law,
providing telecommunications services, like those provided through the Lifeline
program, is a retail sale. RCW 82.04.050(5), RCW 82.04.065(22). The statutory
conditions for a retail sale based on third party consideration are likewise met. See
RCW 82.08.010(1)(c)(i)-(iv). Assurance received consideration from a party other
than the Washington consumer and attested in its FCC filing to the consideration
being related to the services provided. Assurance had an obligation to—and
represented to the FCC that it would—pass through the Lifeline funds to qualifying
consumers. The amount Assurance was eligible to receive for providing each
lifeline plan, $9.25, was fixed and determinable at the time the plan was provided
to the consumer. And the transaction depended on the consumers identifying
themselves as members of a group entitled to receive Lifeline plans because they
met specific criteria as low-income consumers.
Because we conclude that Assurance’s providing mobile wireless service
together with receiving Lifeline funds from USAC is a taxable retail sale, we do not
need to reach the more specific question whether the transaction qualifies as a
taxable sale of “prepaid wireless calling service” as defined in state law. Before
the Board, the Department argued Assurance’s Lifeline plans were prepaid plans.
In its opening brief, Assurance describes its Lifeline recipients as receiving “free
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No. 83089-9-I/11
11
prepaid telecommunication services.” In its reply, Assurance argues that its
Lifeline recipients nevertheless do not receive “prepaid wireless calling service” as
defined under RCW 82.04.065(22), because it receives funds from USAC after,
not before, it provides services. Assurance’s internal accounting is at odds with
both characterizations, because Assurance uses accrual accounting to recognize
Lifeline revenue at the time it provides the service. Nevertheless, Assurance
certifies to the FCC in form 497 that it is passing through to its customers the “full
amount” for which it seeks “reimbursement” from USAC, either by reducing the
subscriber’s bill or by offering a prepaid plan. Whether Assurance seeks
“reimbursement” based on its having provided service for which the recipient
incurred a “bill,” or based on its having provided the recipient a prepaid plan, in
either case it has provided the recipient “telecommunications service” under RCW
82.04.050(5) and received associated “reimbursement.” We affirm the Board’s
conclusion that this was a taxable retail sale.
B
Assurance argues the Board’s decision violates the United States
Constitution, “because it seeks to impose tax on the federal government or an
instrumentality thereof, in violation of the . . . Supremacy Clause.” U.S. CONST. art.
VI, § 2. To establish that a state tax assessment violates the supremacy clause,
Assurance must show that the tax falls directly on the federal government or an
instrumentality of the federal government. Assurance argues that tax immunity is
triggered, because if there is a retail sale, the buyer is the FCC, a federal agency,
or USAC, which Assurance asserts is an instrumentality of the federal government.
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No. 83089-9-I/12
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The Board concluded the buyer is USAC, and concluded that USAC is not an
instrumentality of the federal government having tax immunity. On appeal, the
Department argues that the buyer is either the consumer or USAC and that,
because neither is entitled to tax immunity, it is not necessary to determine which
is the buyer. We agree with the Department.
States are constitutionally prohibited from directly taxing the federal
government, or its instrumentalities. United States v. New Mexico, 455 U.S. 720,
733, 102 S. Ct. 1373, 71 L. Ed. 2d 580 (1982). Taxes are not prohibited if they
merely have an effect on the United States, even if the economic burden is on the
federal government. Id. “[S]o long as the tax is not directly laid on the Federal
Government, it is valid if nondiscriminatory.” Washington v. United States., 460
U.S. 536, 540, 103 S. Ct. 1344, 75 L. Ed. 2d 264 (1983). Assurance does not
argue that the taxes at issue are discriminatory.
In United States v. New Mexico, the federal government argued that its
contractors were entitled to tax immunity because they drew checks directly on
federal funds. 455 U.S. at 737. The Supreme Court rejected this argument, stating
“we cannot believe that an immunity of constitutional stature rests on such
technical considerations.” Id. The Supreme Court outlined a narrow approach to
governmental tax immunity, which “accords with competing constitutional
imperatives, by giving full range to each sovereign’s tax authority.” Id. at 735-36.
The court stated “tax immunity is appropriate in only one circumstance: when the
levy falls on the United States itself, or on an agency or instrumentality so closely
connected to the Government that the two cannot realistically be viewed as
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No. 83089-9-I/13
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separate entities, at least insofar as the activity being taxed is concerned.” Id. at
735. A finding of constitutional tax immunity “requires something more than the
invocation of traditional agency notions: to resist the State’s taxing power, a private
taxpayer must actually ‘stand in the government’s shoes.’ ” Id. at 736 (quoting City
of Detroit v. Murray Corp., 355 U.S. 4489, 503, 78 S. Ct. 486, 2 L. Ed. 2d 460
(1958)). “[A]bsent congressional action, we have emphasized that the States’
power to tax can be denied under only ‘the clearest constitutional mandate.’ ” Id.
at 738 (quoting Michelin Tire Corp. v. Wages, 423 U.S. 276, 293, 96 S. Ct. 535, 46
L. Ed. 2d 495 (1976)).
The parties do not dispute that the FCC would be exempt from direct state
taxation. Assurance argues that because the FCC maintains authority over the
Lifeline program, the Lifeline funds are immune from sales tax. However,
Assurance falls short of showing that the legal incidence of the challenged tax falls
on the FCC. It is undisputed that the funds are paid by the wireless carriers into
the USF, and disbursed from the fund directly to Lifeline carriers, including
Assurance. Assurance has not shown that the FCC at any point incurs the “legal
obligation to pay the tax.” Everi Payments, 6 Wn. App. 2d at 591. We conclude
that the FCC is not the buyer of Lifeline services.
Assurance argues that tax immunity would be triggered if USAC is the
buyer, characterizing USAC as “a payment processor or claims agent” for the FCC,
and arguing that USAC is an instrumentality of the federal government. Relying
on Lewis v. United States, 680 F.2d 1239, 1242 (9th Cir. 1982), Assurance argues
that the federal government’s tax immunity should be liberally applied, and that the
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No. 83089-9-I/14
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test for determining whether an entity is a federal instrumentality protected from
state taxation is “ ‘whether the entity performs an important governmental
function.’ ” In Lewis, the court held that a federal reserve bank was not a federal
agency for purposes of the Federal Tort Claims Act, 28 U.S.C. § 1346(b). Id. at
1241-42. The court distinguished case law holding that the federal reserve banks
were federal instrumentalities for some purposes, including immunity from state
taxation. Id. at 1242. The court reasoned that the test for determining whether an
entity is a federal instrumentality for state tax immunity is “very broad,” “liberally
applied,” and turns on whether the entity “performs an important governmental
function.” Id. In Lewis, that function was the federal reserve banks’ role in
implementing national fiscal policy. Id.
Lewis does not support Assurance’s argument that USAC enjoys federal
tax immunity. Lewis was published only a few weeks after United States v. New
Mexico, in which the Supreme Court clarified that constitutional tax immunity
derived from the supremacy clause is neither very broad nor liberally applied, but
requires a “narrow approach” giving “full range to each sovereign’s taxing
authority.” 455 U.S. at 735-36. Lewis does not mention the constitutional standard
established by the Supreme Court only a few days before its publication. This
court is bound to follow United States v. New Mexico, but there is a further
distinction between Lewis and the present case. The statements in Lewis on which
Assurance relies concerned express congressional exemptions from state tax,
rather than immunity strictly under the supremacy clause. Lewis applied the
statutory terms of the Federal Tort Claims Act to determine if the federal reserve
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No. 83089-9-I/15
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bank was a covered agency. Its comments about the broad scope of tax immunity
did not refer to the constitutional principle of tax immunity, but rather to decisions
that had found tax immunity for federal land banks based on an express statutory
exemption from state tax established by Congress. 680 F.2d at 1242-43 (citing
Fed. Land Bank v. Bismarck Lumber Co., 314 U.S. 95, 99, 62 S. Ct. 1, 86 L. Ed.
65 (1941) (“The unqualified term ‘taxation’ used in section 26 clearly encompasses
within its scope a sales tax such as the instant one.”); Fed. Land Bank of St. Louis
v. Priddy, 295 U.S. 229, 235, 55 S. Ct. 705, 79 L. Ed. 1408 (1935) (“There is thus
a specific grant of immunity from taxation.”)). Assurance does not point to any
statutory exemption from state taxation, but relies exclusively on the constitutional
principle derived from the supremacy clause. To the extent Lewis referred to
“broad” and “liberally applied” immunities from state taxation, it referred to cases
discussing only an express statutory exemption, which is absent here. In contrast,
United States v. New Mexico determines the applicability of the constitutional
immunity from taxation on which Assurance relies.
Under United States v. New Mexico, Assurance has not demonstrated that
USAC “stands in the shoes” of the federal government as an instrumentality.
Assurance invokes traditional notions of agency when it argues that because the
FCC has delegated functions to USAC and because USAC operates under the
authority of the federal government, USAC is an instrumentality of the FCC for the
purposes of state tax immunity. But United States v. New Mexico holds that this
is insufficient to establish tax immunity. 455 U.S. at 736.
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No. 83089-9-I/16
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USAC does not describe itself as an instrumentality of the federal
government. It is uncontested that USAC is a wholly-owned subsidiary of a trade
association that has been given the responsibility to collect, pool, and disburse the
USF funds contributed by carriers. See In re Incomnet, Inc. v. Post-Confirmation
Comm. of Unsecured Creditors of Incomnet Commc’ns Corp., 463 F.3d 1064,
1067 (9th Cir. 2006). While USAC must comply with FCC regulations in carrying
out those responsibilities, the record shows that USAC has expressed publicly on
its website that it is “not a federal government agency or department or a
government controlled corporation.” While the manner in which USAC holds itself
out is not dispositive, it demonstrates USAC’s intent to operate independently from
the federal government and demonstrates that USAC does not “stand in the shoes”
of the federal government.
Quoting 47 U.S.C. § 254(f), (j), Assurance argues that Congress intended
to shelter Lifeline from state taxation, stating, “Congress explicitly recognized the
importance of preserving federal immunity over Lifeline by prohibiting states from
adopting regulations ‘inconsistent with the Commission’s rules to preserve and
advance universal service’ or doing anything that ‘shall affect the collection,
distribution, or administration of the Lifeline Assistance Program.’ ” But Assurance
overlooks that 47 U.S.C. § 254(f) goes on to say, “A State may adopt regulations
to provide for additional definitions and standards to preserve and advance
universal services within that State . . . that do not rely on or burden Federal
universal service support mechanisms.” In the same statute, subsection (j) reads,
“Nothing in this section shall affect the collection, distribution, or administration of
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No. 83089-9-I/17
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the Lifeline Assistance Program provided for by the Commission under [other
regulations].” 47 U.S.C. § 254 (j). When read in its entirety, this statute does not
support Assurance’s argument because it does not contain a clear statement of
preemption of state tax.
If Congress had intended to establish USAC as an instrumentality of the
federal government, it could have followed a statutory route for doing so. It did
not. The Government Corporation Control Act of 1945 provides that “[a]n agency
may establish or acquire a corporation to act as an agency only by or under a law
of the United States specifically authorizing the action.” 31 U.S.C. § 9102.
Congress has defined “agency” for purposes of Title 31 of the United States Code
as a “department, agency, or instrumentality of the United States Government.”
31 U.S.C. § 101. Assurance has not shown a clear congressional mandate that
USAC or USF funds be exempt from state taxation.
As a result, the tax immunity of the federal government would not be
triggered if USAC is the buyer. No party argues tax immunity would be triggered
if the consumer is the buyer. AARO explained that RCW 82.05.050 requires a
vendor to remit sales tax to the Department, regardless of whether the vendor
collects the sales tax from the purchaser. 132 Wn. App. at 711. In AARO, where
the two possible purchasers were either Washington consumers or the federal
government, it was necessary to identify the buyer because one of the two possible
buyers was immune. See id. at 720. It is not so here. Of the potential buyers
remaining after the FCC has been eliminated (USAC or Washington consumers),
neither is the federal government or an instrumentality of the federal government
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No. 83089-9-I/18
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and neither is immune from sales tax. We affirm the Board’s conclusion that the
federal government’s tax immunity is not triggered.
III
We affirm the Board’s conclusions that a retail sale occurred when
Assurance provided Lifeline plans to Washington consumers and received Lifeline
funds, and that these sales are not exempt from tax by virtue of the buyer being
the federal government or an instrumentality thereof.
Affirmed.
WE CONCUR:
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