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July 29, 2013

RE: S-2324/A-3393, Verizon Business Personal Property Tax Matter Inaction Jeopardizes More Municipalities Each Year

Dear Mayor:

In 2009 Verizon unilaterally claimed a Business Personal Property Tax (BPPT) exemption in five municipalities. In 2010, 28 municipalities were added to the list. In 2011, 31 more municipalities were told by Verizon that they would no longer receive their BPPT payments. And last year, they were joined by 45 more. As a result, 109 municipalities entered 2013, knowing that they would need to balance their budgets without Verizon BPPT payments.

We anticipate more municipalities will be receiving notification from Verizon, over the next few months, indicating that they will not receive payments in the future.

If your municipality is among those who will be losing Verizon BPPT, please let us know. Also, please provide us with an estimate of what this loss will mean to your citizens.

When last we wrote on this matter (See our April 11 letter at http://www.njslom.org/letters/2013-0411-verizon.html), we anticipated some legislative action before summer recess. To date, neither the Senate Community and Urban Affairs Committee, nor the Assembly Telecommunications and Utilities Committee, which have jurisdiction over this matter, has scheduled a public hearing.

At issue is the appropriate interpretation of statutory language N.J.S.A. 54:4-1, which provides for the taxation of certain business personal property (BPPT). The Statute, both a remedial and revenue-producing measure, was designed to address a monopoly by certain telecommunications carriers and impose a tax on those carriers’ infrastructure.

Beginning in the autumn of 2009, one of the carriers claimed an exemption from the BPPT in any municipality where the corporation unilaterally determines, in any given year, that it no longer supplies dial tone and access to at least 51% of a local telephone exchange. That claim was rejected by the Mercer County Board of Taxation in 2009. The corporation appealed that decision to Tax Court (Verizon v. Hopewell), which reversed that ruling and allowed Verizon to claim the exemption, pending further litigation regarding the facts. A subsequent Appellate decision permits that interpretation to stand.

In response to that decision, Senators Smith, Greenstein and Turner introduced S-2324, and Assemblymen Caputo and Gusciora introduced A-3393, which will provide better direction to the courts regarding the legislature’s intent to protect residential property taxpayers, when laws regarding State taxation of telecommunications providers were reformed in 1997.

With some legislative hearings possible before Election Day, we ask all Mayors to contact the chairs of the respective committees, asking them to advance the legislation as soon as they can.

A-3393 is in the Assembly Telecommunications and Utilities Committee, Chaired by Assemblyman Upendra Chivukula. He can be reached at (732) 247-3999 or AsmChivukula@njleg.org. S-2324 awaits action in the Senate Community and Urban Affairs Committee. The Chairman, Senator Jeff Van Drew can be reached at (609) 465-0700, (856) 765-0891, (856) 696-7109 or SenVanDrew@njleg.org

Even with 109 municipalities losing all of their BPPT funding, business personal property owned by telecommunications companies generated $56 million in municipal revenues in 2012.

If you have any questions, contact Jon Moran at 609-695-3481 or jmoran@njslom.com

Very truly yours,

William G. Dressel, Jr.
Executive Director

 

 

 

 

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