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Posted on: September 13, 2019

Lame Duck Preview: Supporting Telecommunications Legislation

The League fully supports A-5450/S-3827, which will clarify telecommunications industry corporate tax responsibilities, and shield local taxpayers from the costs of endless tax court litigation. We thank the sponsors for their attention to this problem.

What you can do?   

Please pass the League’s model resolution urging support for this important initiative and provide copies to your State Legislators.

Background

A-5450 was approved by the Assembly Appropriations Committee in June. It is now at Second Reading in the Assembly. S-3827 awaits consideration in the Senate Community and Urban Affairs Committee.

The dispute began in 2008 when Verizon informed a handful of municipalities that it had decided to exempt itself from payment of taxes on all of the cables and electronic equipment it houses in local switching stations. Based on a misreading of a 1997 law, Verizon claimed that it could exempt itself from the payment of business personal property taxes (BPPT), in any year and in any municipality, when and where it, unilaterally and without documentation, determined that it provided less than 51% of dial tone service.

In the years that followed, similar decisions by Verizon have led to cases affecting taxpayers in hundreds of other New Jersey municipalities. And in the years to come, even more municipalities will undoubtedly be denied this funding.

Earlier this year, Hopewell Borough in Mercer County prevailed over Verizon in a Tax Court case involving the corporation’s claimed exemption for 2008. It took one municipality ten years to ensure that Verizon would pay its 2008 taxes. Further litigation will be needed for Hopewell to secure BPPT payments for each subsequent year in which the exemption was claimed. Every other municipality faces the same prospect of costly annual tax court filings, which, as we have seen, can drag on for over a decade. But even that might not end the problem, as Verizon has appealed the final Tax Court decision, forcing Hopewell Borough to put even more time and treasure into the fight.

A-5450/S-3827 would put an end to the travail. It will clarify the Legislature’s intent to permanently apply the business personal property tax on local exchange telephone companies that were subject to the tax as of April 1, 1997. 

Contact: Jon Moran, Senior Legislative Analyst, jmoran@njlm.org, 609-695-3481 x121. 


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