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September 1, 2011

Re: Verizon v. Hopewell - Status Update

Dear Mayor:

As indicated in previous communications, Hopewell Borough in Mercer County has appealed Verizon’s decision to cease paying the Business Personal Property Tax based upon its interpretation of the applicable statute.  Verizon interprets the statute to provide that once it unilaterally determines that it no longer supplies dial tone and access to at least 51% of the local telephone exchanges in a municipality, payment of the tax is not required. 

The matter is now pending before Judge Menyuk in the State Tax Court.  The League appeared as Amicus Curiae in the matter and the State intervened as a party.  Verizon and Hopewell filed cross-motions for summary judgment, with the League submitting an Amicus brief.  Oral argument, in which all parties and the League participated, was held on September 16, 2010. 

In the motions, Verizon reiterated its position that the “51%” language in the statute exempts it from paying local business personal property taxes in those municipalities where it claims to no longer supply dial tone to a majority of the telephone market and, further, claims that, regardless of how the statute is interpreted, it is unconstitutional.  The League has opposed Verizon’s position on the statutory interpretation issue, arguing against the self-serving interpretation that Verizon can unilaterally determine whether it is subject to the tax in a given locality.  The League maintains that the statute specifically provides that those telecommunications carriers formerly subject to the New Jersey Franchise and Gross Receipts Tax Act will continue to be taxed, and  contains no provision for an annual “test” to determine whether the tax continues to apply. 

The League also addressed the merits of Verizon’s constitutional claims, i.e., that its right to equal protection has been violated, and that the statute amounts to invalid special legislation and violates the Uniformity Clause.  While the League set forth in detail the reason why these claims are unsubstantiated, the State (and Hopewell) have taken the position that a decision on the constitutional issues should be deferred, pending the Court’s resolution on the statutory interpretation issue.

Following oral argument last September, the Judge allowed the parties to submit supplemental briefing on two issues raised in the course of argument.  Additional briefs were submitted by Hopewell, Verizon and the League on October 25, 2010.  Judge Menyuk has not yet issued a decision, and the League’s counsel has confirmed in a recent telephone call with her chambers that the matter is still under the Judge’s consideration. 

In the meantime, Verizon has continued to communicate its position that it is no longer subject to the business personal property tax to numerous additional municipalities.  Municipalities affected by Verizon’s actions should contact their municipal attorneys, who may feel free to confer with Joel L. Shain, Esq., League Counsel in this matter, to ensure that appropriate action is taken to protect their rights.  

Further information contact Jon Moran at (609) 695-3481 ext. 121 or

Very truly yours,

William G. Dressel, Jr.
Executive Director




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