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Advocacy Executive Director's Reports Codifying ATB telecom ruling must be a priority
With less than four months remaining in the Legislative session, there are many important issues that deserve immediate attention. Here is one that should be at the very top of the list: codifying the recent decision by the Massachusetts Appellate Tax Board verifying that telecommunications companies should pay local property taxes on all of their poles and wires.
In early March the Appellate Tax Board ruled that Verizon is required to pay property taxes on poles and wires that are located on public ways. As a result of the decision, cities and towns will be collecting approximately $52 million in tax revenue during fiscal 2009 – taxes that Verizon and other telephone companies have avoided paying until this decision clarified the law. Because Verizon is expected to launch a legal strategy to appeal and seek lengthy delays, however, this money will be collected but will remain in local tax overlay accounts; it will not be available to fund local services or reduce the overall property tax burden in communities until these delays and appeals have been exhausted.
Legislation codifying the Appellate Tax Board ruling would allow communities to budget the tax revenues in fiscal 2009, providing immediate relief to fiscally distressed cities and towns as well as the homeowners and businesses who rely on local services and have been hit with higher property taxes because of Verizon’s tax-dodging strategies.
For years telephone companies, most notably Verizon, have claimed that the state’s tax code allows them to avoid paying taxes on their poles and wires located on public ways. Legislation to address this abuse has been filed for several years by the MMA, supportive lawmakers, and, most recently, by the Patrick-Murray administration. At the same time, many cities and towns (led by Boston, Newton and others) filed challenges to Verizon’s use of a telecommunications tax provision from the early 1900s – correctly arguing that this outdated tax exemption to encourage the buildout of telephone and telegraph service is obsolete and does not apply.
The Appellate Tax Board ruling confirmed that Verizon and other carriers must pay taxes on all of their poles and wires. (The telecom carriers have been paying taxes on poles and wires on private ways, and electric utilities have been paying taxes on all of their poles and wires – evidence of how absurd the system has been.)
The abuse of this arcane tax provision has forced an increase in taxes paid by residents and owners of local businesses. Contrary to claims by representatives of telecommunications businesses, there is absolutely no evidence that closing this loophole will raise telephone bills or cause a rollback in investment in new infrastructure and services. From a consumer’s perspective, Verizon’s tax avoidance has not resulted in lower rates. In fact, of all the states in which Verizon does business, Massachusetts has the fourth-lowest total tax burden, while Verizon customers in Massachusetts have the fifth-highest monthly bill. There is no correlation between tax burden and company phone rates.
Current estimates, assembled by the first-rate Assessor’s Office in the city of Boston, place the potential tax value of the ATB ruling at $52 million statewide. This number will become clearer this spring, as the ATB has ordered Verizon to provide the Department of Revenue with a full listing of their poles, wires and the respective valuations, and the DOR will share this data with local assessors this spring, well before the beginning of the next fiscal year.
There is another telecommunications tax loophole provision that should be addressed, primarily to end the tax avoidance activities of Verizon and other carriers to skirt personal property tax payments on their valuable switching equipment. That issue was not a subject of the ATB ruling. The MMA and local officials will continue to advocate strongly for ending that loophole. Yet, in the meantime, immediate action to codify the ATB decision should be a top priority.
The bottom line is that Verizon has a responsibility to pay its fair share. Expensive and dilatory appeals on their part will only serve to keep this inequity in place even longer, and the public interest will be harmed by unnecessary delays and strategies that prevent localities from using the funds to address today’s budget challenges.
Action by the Legislature to codify the ATB ruling will prevent unnecessary delays, ensure tax equity and fairness, and provide communities immediate access to up to $52 million in tax revenues that will be collected during fiscal 2009. With so many cities and towns facing severe fiscal distress, this is an important and meaningful step that should be taken right away.
Advocacy Executive Director's Reports Codifying ATB telecom ruling must be a priority
Codifying ATB telecom ruling must be a priority
With less than four months remaining in the Legislative session, there are many important issues that deserve immediate attention. Here is one that should be at the very top of the list: codifying the recent decision by the Massachusetts Appellate Tax Board verifying that telecommunications companies should pay local property taxes on all of their poles and wires.
In early March the Appellate Tax Board ruled that Verizon is required to pay property taxes on poles and wires that are located on public ways. As a result of the decision, cities and towns will be collecting approximately $52 million in tax revenue during fiscal 2009 – taxes that Verizon and other telephone companies have avoided paying until this decision clarified the law. Because Verizon is expected to launch a legal strategy to appeal and seek lengthy delays, however, this money will be collected but will remain in local tax overlay accounts; it will not be available to fund local services or reduce the overall property tax burden in communities until these delays and appeals have been exhausted.
Legislation codifying the Appellate Tax Board ruling would allow communities to budget the tax revenues in fiscal 2009, providing immediate relief to fiscally distressed cities and towns as well as the homeowners and businesses who rely on local services and have been hit with higher property taxes because of Verizon’s tax-dodging strategies.
For years telephone companies, most notably Verizon, have claimed that the state’s tax code allows them to avoid paying taxes on their poles and wires located on public ways. Legislation to address this abuse has been filed for several years by the MMA, supportive lawmakers, and, most recently, by the Patrick-Murray administration. At the same time, many cities and towns (led by Boston, Newton and others) filed challenges to Verizon’s use of a telecommunications tax provision from the early 1900s – correctly arguing that this outdated tax exemption to encourage the buildout of telephone and telegraph service is obsolete and does not apply.
The Appellate Tax Board ruling confirmed that Verizon and other carriers must pay taxes on all of their poles and wires. (The telecom carriers have been paying taxes on poles and wires on private ways, and electric utilities have been paying taxes on all of their poles and wires – evidence of how absurd the system has been.)
The abuse of this arcane tax provision has forced an increase in taxes paid by residents and owners of local businesses. Contrary to claims by representatives of telecommunications businesses, there is absolutely no evidence that closing this loophole will raise telephone bills or cause a rollback in investment in new infrastructure and services. From a consumer’s perspective, Verizon’s tax avoidance has not resulted in lower rates. In fact, of all the states in which Verizon does business, Massachusetts has the fourth-lowest total tax burden, while Verizon customers in Massachusetts have the fifth-highest monthly bill. There is no correlation between tax burden and company phone rates.
Current estimates, assembled by the first-rate Assessor’s Office in the city of Boston, place the potential tax value of the ATB ruling at $52 million statewide. This number will become clearer this spring, as the ATB has ordered Verizon to provide the Department of Revenue with a full listing of their poles, wires and the respective valuations, and the DOR will share this data with local assessors this spring, well before the beginning of the next fiscal year.
There is another telecommunications tax loophole provision that should be addressed, primarily to end the tax avoidance activities of Verizon and other carriers to skirt personal property tax payments on their valuable switching equipment. That issue was not a subject of the ATB ruling. The MMA and local officials will continue to advocate strongly for ending that loophole. Yet, in the meantime, immediate action to codify the ATB decision should be a top priority.
The bottom line is that Verizon has a responsibility to pay its fair share. Expensive and dilatory appeals on their part will only serve to keep this inequity in place even longer, and the public interest will be harmed by unnecessary delays and strategies that prevent localities from using the funds to address today’s budget challenges.
Action by the Legislature to codify the ATB ruling will prevent unnecessary delays, ensure tax equity and fairness, and provide communities immediate access to up to $52 million in tax revenues that will be collected during fiscal 2009. With so many cities and towns facing severe fiscal distress, this is an important and meaningful step that should be taken right away.
Written by MMA Executive Director Geoff Beckwith
