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Home My WebLink AboutRes 2003-62RESOLUTION NO.2003-62 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HELLS,ARIZONA,APPROVING A "CLOSING AGREEMENT" WITH COXCOM PERTAINING TO A PENDING LAWSUIT FILED BY COXCOM AGAINST THE STATE OF ARIZONA AND THE TOWN OF FOUNTAIN HILLS IN REFERENCE TO DISPUTED TRANSACTION PRIVILEGE TAX ASSESSMENTS FOR THE PERIOD OF JULY 1,1994 THROUGH SEPTEMBER 20,1998. WHEREAS,CoxCom Inc.("CoxCom"),hasfileda lawsuit againsttheTownofFountain Hills(the "Town")to contest assessed transaction privilege taxesfromJuly1,1994through September 20,1998(the "Litigation");and WHEREAS,the Mayor and Council of the Town of Fountain Hills (the 'Town Council") has determined thata compromise of the Litigation isinthe best interest of Town;and WHEREAS,the Town Council has determined that the benefits of future uncontested tax revenue related tothe sale of television guides and rentals of cable modems outweigh waived back taxes and penalties;and WHEREAS,the Town Council and CoxCom have determined that a settlement isin the best interest of all concerned. NOW,THEREFORE,BE IT RESOLVED BY THE MAYOR AND COUNCIL OFTHE TOWN OF FOUNTAIN HILLS as follows: SECTION 1.That the closing agreement between the Town and CoxCom (the "Closing Agreement")ishereby approved intheform attached heretoas Exhibit Aand incorporated hereinby reference. SECTION 2.That the Mayor,the Town Manager,the Town Clerk andthe Town Attorney arehereby authorized and directed to(i)takeallstepsnecessarytocausetheexecutionoftheClosing Agreementandallexhibitstheretoand(ii)makethenecessarylanguagechangestotheClosing Agreementwhichdonotalteritssubstantiveoressentialterms. [SIGNATURES ON FOLLOWING PAGE] 9196.001\Resolutions\2003-62 CoxCom Closing res.v2.doc 9-15-03-1 • PASSED AND ADOPTED bythe Mayor andCouncil of theTownof Fountain Hills, September 18,2003. FOR THE TOWN OF FOUNTAIN HILLS: W.J.Nichdls,Mayor-^ REVIEWED BY: As Tim CrTPickering,Town Manager ^•#>-e?S 9196.001\Resolulions\2003-62 CoxCom Closing res.v2.doc 9-l5-03-1 ATTESTED TO: i4idCL BevelynJ.BenclerJfown Clerk APPROVED AS TO FORM: Al Andrew J.McGuire,Town Attorney L \|^/ N^jgp^ CLOSING AGREEMENT The TOWN OF FOUNTAIN HILLS,an Arizona municipal corporation ("TOWN")and COXCOM,INC.,a Delaware corporation doing business in Arizona ("TAXPAYER"),which holds Arizona transaction privilege tax license number 07-159547-R,enter into this Closing Agreement ("Agreement")forthepurposeofsettling TAXPAYER'S liabilityunderthe transaction privilege tax assessment issued bythe TOWN for transaction privilege tax,interest and penalties fortheperiodJuly1,1994 through September30,1998,as amended (the "Assessment";theforegoingperiodisthe "Assessment Period").In order toavoidthecostsand risksoflitigation,thepartieshaveagreedtoresolvetheissuesarisingfromtheAssessmentas outlinedinthis Agreement: 1.The Assessment delineates additional transaction privilegetaxdue collectively to theTOWN from TAXPAYER ofOneThousand Twenty-seven DollarsandEighty-fourCents ($1,027.84),plusinterestcollectively of SevenHundredForty-sixDollarsandTwenty-sixCents ($746.26)calculatedthroughSeptember30,2003,andpenaltiescollectively of Twenty-one ThousandFiveHundredFifty-nineDollarsandSixteenCents($21,559.16),foratotal of Twenty-threeThousandThreeHundredThirty-threeDollarsandTwenty-sixCents($23,333.26). 2.TAXPAYER agrees to pay one-half of thetaxdue under the Assessment andone- halfoftheaccruedinterestthroughthedateofpayment,inonelumpsumpaymentofEight HundredEighty-sevenDollarsandFiveCents($887.05)(suchpayment,plusanyinterest thereon,beingreferredtohereinasthe"Payment"),bydelivery of asinglecheckinthatamount madepayabletoTOWN,anddeliveredtooutsidelegalcounselfortheTOWN,LarryWulkan, notlaterthantwenty(20)daysafter TAXPAYER is notified ofexecutionofthis Agreement by theTown,plusinterestatZeroDollarsandTwenty-threeCents($0.23)foreachdayafter September30,2003,before TAXPAYER deliversthePaymenttoLarryWulkan. 3.The TOWN agreestoacceptthe Payment infull satisfaction of TAXPAYER'S liabilityundertheAssessmentfortransactionprivilegetaxandinterestfortheAssessment PeriodandforaccruinginterestrelatingtotheAssessmentfromOctober 1,1998,through September30,2003.TheTOWNspecificallyagreestoabateinfullthepenaltiesassessed.The TOWNfurtheragreesin consideration of TAXPAYER'S timely making the Payment thatthe Townwillassessnotransactionprivilegetax,interestorpenaltieswithrespecttotheperiodfrom October 1,1998,through September 30,2003(the "Interim Period")on TAXPAYER'S sales of cabletelevisionprogramguides("CableGuides")oronitssalesandleases of computercable modems ("Cable Modems"). 4.Prospectively,commencing October 1,2003(the "Commencement Date"), TAXPAYER agrees to report and pay all transaction privilege tax obligations onits sales of CableGuidesandonitssalesandleases of CableModems,inaccordancewiththeapplicable provisions of thetaxcode of the TOWN and other applicable lawasineffectfromtimetotime, andsubjecttoanyoffsetsorcreditstowhichTAXPAYERmaybeentitledunderits specific license agreement withtheTOWN.TheTOWNunderstandsandagreesthatthis agreement by TAXPAYER appliestoandshallbe implemented astosales of Cable Guidesandsalesand leases of Cable Modems for which TAXPAYER issues bills toits customers,whether ornot itemized,on and after the Commencement Date. lof3 5.TAXPAYER'Sfailuretomakethe Payment infullina timely manner shall constitute a material breach of this Agreement,andupon such failurethe TOWN shallbe entitled,upon demand,to collect thefull balance of the amounts due under the Assessment, together with interest atthe statutory rateand penalties,andto assess TAXPAYER for transaction privilege tax,interestand penalties withrespecttotheInterimPeriodon TAXPAYER'S sales of CableGuidesanditssalesandleases of Cable Modems (subject toany offsetsor credits to which TAXPAYER may be entitled underits specific license agreement with the TOWN).In addition,the TOWN may,atits option,seek any legal remedy available for collection of suchamount,including butnotlimitedtolevyand foreclosure of TAXPAYER'S realand personal property. 6.The TOWN'S failuretotakeanyactionto which itis entitled shallnot constitute awaiver of anyrighttodosointheevent of any subsequent breach. 7.Exceptasprovidedinparagraph8,thepartiestothisAgreementherebymutually releaseeachotherfromanyandallclaims,damages,assessments,andcauses of actionrelating inanywaytotheAssessment.Withrespecttotheremittance of anytransactionprivilegetaxon TAXPAYER'S sales of Cable Guides or sales or leases of Cable Modems during the Interim Period,TAXPAYERalsoagrees:(i)towaiveanyrighttorefund,(ii)nottoassigntoanother anyrighttoanysuchrefundthatitmayhaveor otherwise allowanothertoseekanysuch refund onits behalf,and (iii)not tocommenceanynew litigation.Thepartiesshallcausetheir attorneys to file a stipulation to dismiss the proceeding now pending before the Arizona Tax CourtinCaseNo.TX2002-000370 insofar asitappliestothe Assessment,butnotastoany other party to that proceeding orastoso much of that proceeding as pertains toany transaction privilege,county excise tax,or privilege license tax assessed onbehalfofthe State of Arizona, any county thereof,and any Town or town that is not a signatory to this Agreement.The stipulation for dismissal shall provide that each party will bearits own attorneys fees and court costs. 8.Thereleaseinparagraph7shallnotapplyto,oraffectinanyway, TAXPAYER'S pending requests for refunds for transaction privilege taxes assessed or paid underthetelecommunicationsclassifications of theapplicabletaxcodes of theTOWN.In addition,nothing in this Agreement shall in any way affect or impair (i)TAXPAYER'S ability to argue that it may recover refunds,establish the right to credits,and avoid assessment of taxes in the future,by reason of the Arizona Supreme Court's decision in People's Choice TV Corp.v. Tucson,46 P.3d 412 (Ariz.2002){"People's Choice"),or (ii)the TOWN'S ability to argue that People's Choice does not entitle TAXPAYER to recover refunds or avoid the assessment of taxes inthe future,orthatany portion ofthe refund sought bythe TAXPAYER is barred byany applicable limitation period or other affirmative defense. 9.This Agreement shall not imply any TOWN policy or TAXPAYER acceptance of or agreement to any Town policy,except as expressly stated herein,with respect to the taxability or nontaxability of any activity under any tax,including any transaction privilege or privilege license tax imposed by any other Town or town orby the State of Arizona. 2 of 3 \iiiH^y C 5.TAXPAYER'S failure to make the Payment in full ina timely manner shall constitute a material breach of this Agreement,and upon such failure the TOWN shall be entitled,upon demand,to collect the full balance of the amounts due under the Assessment, together with interest atthe statutory rate and penalties,andto assess TAXPAYER for transaction privilege tax,interest and penalties with respect to the Interim Period on TAXPAYER'S sales of Cable Guides and its sales and leases of Cable Modems (subject to any offsets or credits to which TAXPAYER may be entitled under its specific license agreement with the TOWN).In addition,the TOWN may,at its option,seek any legal remedy available for collection of such amount,including but not limited to levy and foreclosure of TAXPAYER'S realandpersonalproperty. 6.TheTOWN'S failure totakeanyactiontowhichitisentitledshallnot constitute a waiver ofany right todosointhe event ofany subsequent breach. 7.Except as provided in paragraph 8,the parties to this Agreement hereby mutually release each other from any and all claims,damages,assessments,and causes of action relating in any way to the Assessment.With respect to the remittance of any transaction privilege tax on TAXPAYER'S sales of Cable Guides or sales or leases of Cable Modems during the Interim Period,TAXPAYER also agrees:(i)to waive any right to refund,(ii)not to assign to another any right to any such refund that it may have or otherwise allow another to seek any such refund on its behalf,and (iii)notto commence any new litigation.The parties shall cause their attorneys to file a stipulation to dismiss the proceeding now pending before the Arizona Tax Court in Case No.TX2002-000370 insofar as it applies to the Assessment,but not as to any other party to that proceeding orastoso much of that proceeding as pertains toany transaction privilege,county excise tax,or privilege license tax assessed onbehalfofthe State of Arizona, any county thereof,and any Town or town thatisnota signatory tothis Agreement.The stipulation for dismissal shall provide that each party will bearits own attorneys fees and court costs. 8.The release in paragraph 7 shall not apply to,or affect in any way, TAXPAYER'S pending requests for refunds for transaction privilege taxes assessed or paid under the telecommunications classifications of the applicable taxcodes of the TOWN.In addition,nothing in this Agreement shall in any way affect or impair (i)TAXPAYER'S ability to arguethatitmayrecoverrefunds,establishtherighttocredits,andavoidassessment of taxesin the future,by reason ofthe Arizona Supreme Court's decision in People's Choice TV Corp.v. Tucson,46P.3d412 (Ariz.2002)("People's Choice"),or(ii)theTOWN'S ability to argue that People's Choice doesnot entitle TAXPAYER to recover refunds or avoid the assessment of taxes inthe future,orthatany portion ofthe refund sought bythe TAXPAYER is barred byany applicable limitation periodorother affirmative defense. 9.This Agreement shall notimplyany TOWN policyor TAXPAYER acceptance of or agreement toanyTown policy,exceptasexpresslystatedherein,withrespecttothe taxability or nontaxability ofany activity under anytax,including any transaction privilege or privilege licensetaximposedbyanyotherTownortownorbytheState of Arizona. 2 of 3 10.To the fullest extent allowed by law,the parties shall treat this Agreement as confidential.Except for the purpose of enforcing the provisions of this Agreement,this Agreement shall not be admissible inany other proceeding for any other period with respect to anyothermatter,includingwithoutlimitationanypendingorfuturerefundclaimor administrative or judicial proceeding ofany kind concerning State or municipal transaction privilegeor privilege licensetaxes. 11.This Agreement is final and conclusive exceptupona showing of fraud, malfeasanceormisrepresentation of materialfactbyTAXPAYERasitrelatestothe Assessment. 12.This Agreement shallbebindinguponandshallinuretothebenefitofthe parties hereto,theirpredecessorsandsuccessorsininterestandtheirassigns. 13.Noprovisionofthis Agreement shallbewaivedormodifiedexceptin writing signed by TAXPAYER andthe TOWN. 14.ThisAgreementrepresentstheentireunderstanding of theparties;thereareno other agreements or representations other thanthose contained herein. WesignthisAgreementasfullyauthorizedrepresentatives of therespectiveparties. DATED:qJU,\o3 COXCOM,INC., a Delaware corporation By: HowaraTigerman Its:VP business Operations 3 of 3 DATED:9'/9-0?) TOWN OF FOUNTAIN HILLS, an Arizona municipal corporation ATTEST: BevelynJ.Beriderj TownClerk