Verizon may soon be required to foot the bill for nearly a decade of unpaid taxes following the introduction of a proposal for new legislation in Trenton by South Jersey Assemblyman John J. Burzichelli. According to one proponent of the bill, Hopewell Borough Mayor Paul Anzano, the legislation might effectively force the company to pay back taxes it has refused or fought in court not to pay.
The legislation, if the bill passes, would require Verizon to pay local taxes on telephone poles, lines, land use, and equipment retroactively to 2009, recent reports say.
This only seems to impact Verizon
No details have been provided regarding the total amount the mobile carrier should be expected to shell out and no other providers have been explicitly implicated, although others are said to have followed similar tactics to avoid paying.
According to Mayor Anzano, the company has effectively ducked out of paying tens of millions in municipality taxes, stretched across more than a hundred towns in 29 of the state’s 40 districts.
Prior legislation related to business personal property tax had been intended to tax companies with over 51 percent of the market share in 1997, allowing others to skip out on taxes. Verizon has fought back against paying those taxes by claiming it only held 44 percent to 48 percent of the market share -- specified by the original law as pertaining to landline phone service -- due to the growth of the use of wireless service and cable phone service.
The figure was later proven to be incorrect, as of the finalization of a case stemming from Hopewell Borough reaching a determination in January. The company had held 90-percent of the overall market share.
The Hopewell case has yet to be contested by Verizon but could be drawn out over several years, costing the municipality well over the $200,000 in estimated costs it has incurred fighting the telecom and only resulting in approximately $40,000 per year that the taxes went unpaid.
Regardless of whether or not Verizon wins an appeal, the assemblyman claims that the legislation that was in place has been misrepresented and misinterpreted. The new legislation stems from the Hopewell Borough case and seeks to close any loopholes that have allowed Verizon to avoid paying those taxes. Chances are good, according to the legislator, that the law will pass and bring an end to case-by-case trials across the state's municipalities and districts, enforcing the intended purpose of the original legislation.
A local problem for Verizon or the beginnings of a potentially nationwide precedent?
If legislation is passed to force Verizon to pay back overdue taxes to local cities in New Jersey, the case might extend beyond that region. While the initial fallout for Verizon will probably only equate to tens of millions owed in back taxes, there is with some possibility it will be required to pay for legal fees incurred by suing parties. It's also not out of the question for that have a ripple effect elsewhere.
Depending on the specifics of the legislation and how firmly courts do or do not uphold the legislation -- if it passes, to begin with -- subsequent cases may pave the way via a legal precedent for other states and other regional districts or cities to follow suit.
That would spell trouble for providers other than Verizon too since the company is not the only one noted to avoid paying local taxes on equipment, land, or installations in New Jersey. Specifically, it could extend to include legislation aimed directly the likes of T-Mobile, Sprint, AT&T, and others where applicable tax or fee laws have been skirted using the verbose language of legislation that is already in place.
It would be surprising if the new legislation does not incorporate requisite wording to include taxation of upcoming 5G networking technologies, which are expected to grow more rapidly than prior iterations. Given the provider's dependence on the language of the bill and extent of the underlying problem, this ongoing battle in what is otherwise a relatively small state in question could easily kick off a much larger trend.