Last Thursday, the Assembly Telecommunications and Utilities Committee advanced A-5982, which concerns local taxation of business personal property of local exchange telephone companies.
This bill clarifies the application of the business personal property tax on local exchange telephone companies that were subject to the tax as of April 1, 1997. The Tax Court, in Verizon New Jersey Inc. v. Borough of Hopewell, which was decided on June 26, 2012, construed the plain meaning of the language of the statutory change made in 1997 in a manner inconsistent with Legislative intent. The statutory change was intended to permanently make part of a municipality’s property tax base the business personal property of all incumbent local exchange companies that were then subject to that tax and were a telecommunications carrier then meeting the definition of providing dial tone and access to 51 percent of a local telephone exchange.
This bill will restore the local property tax status intended to be determined in 1997 by revising the definition of "local exchange telephone company" to mean a telecommunications carrier which held the regional monopoly on landline service before the market was opened to competitive local exchange carriers by the federal Telecommunications Act of 1996, or the corporate successors of such a local exchange telephone company. This will require that the dominant telecommunications carrier in each region pay the business personal property tax on its business personal property regardless of the percentage of a local telephone exchange that it serves, and will permanently enshrine that business personal property into the tax base of the municipalities in which it is located.
The bill would also require that if a municipality is the prevailing party in a court proceeding between it and a local exchange telephone company concerning the taxation of business personal property, the municipality, and any related amicus entities, shall be awarded attorney’s fees as costs to the local exchange telephone company.
The bill has currently been referred to the Assembly Science, Innovation and Technology Committee, and we will continue to advise you on developments.
Contact: Erin Knoedler, Legislative Analyst, eknoedler@njlm.org, 609-695-3481, x116.