Bill Comes as Towns like Nutley Face Revenue Losses as Verizon Decides to Stop Paying Business Property Tax
Assemblyman Ralph Caputo (D-Essex) has introduced legislation to protect taxpayers from being forced to foot the bill when telecommunications giants decide to stop paying property taxes in certain municipalities, a decision that is currently affecting 68 towns throughout New Jersey.
“Towns across our state are getting hit by Verizon’s decision not to pay their fare share of property taxes anymore,” said Caputo. “Residents shouldn’t be left holding the tab because Verizon has decided to exploit loopholes. This is about basic fairness, especially when a company has made a fortune off of this business property.”
Under current law, telephone companies that, as of April 1, 1997, provided dial tone service to at least 51 percent of a local telephone exchange were required to pay a tax to municipalities on its personal business property, such as utility poles, cables and equipment.
Verizon went to court arguing that it no longer services 51 percent of the population in certain towns. In June, a New Jersey tax court ruled in its favor, leaving already cash-strapped towns struggling to recoup this loss. Caputo noted that Verizon did not produce proof of the percentage of dial tones it services, nor did the court weigh the fact that the company is providing phone service through FiOS, its Internet phone system.
“Homeowners probably wish they had the luxury of saying, ‘Well, I only use a certain percentage of my house most of the time, so I’m only going to pay property taxes on that portion.’ Unfortunately, they don’t and Verizon shouldn’t either,” added Caputo.
In Caputo’s district, the Township of Nutley is currently facing a $200,000 loss in revenue because of Verizon’s decision. Nutley has since decided to join with the New Jersey League of Municipalities and the Borough of Hopewell in Mercer County to contest Verizon’s decision in court.
Caputo’s legislation would provide continuity and reliability for municipalities by clarifying that the business personal property tax applies to any telephone company that provided dial tone service to 51 percent of a local exchange, as of April 1, 1997, when changes were made to the law.
The bill, A-3393, was officially introduced on Monday.