New Senate Bill Looks to Revise Personal Property Tax on Telecommunications Infrastructure
On October 17, 2022, State Senator Holly Schepisi introduced Bill S3209, a bill designed to revise the State’s Business Personal Property Tax as it is applied to telecommunications infrastructure. This bill, which is still pending before the Senate Community and Urban Affairs Committee, would remove some language from the current law which has been the subject of multiple court cases in New Jersey. It would also expand the law to include telecommunications equipment of various wireless telephone companies.
New Jersey has two specific property taxes that it levies. The first one, the real property tax, is fairly common to most of the New Jersey residents and businesses who have to pay that tax based on the value of their home or business property. The other tax, Business Personal Property Tax, applies to only two types of personal property. The first, petroleum refining equipment, is not subject to any changes in this bill. The second type of property subject to tax is the “tangible goods and chattels, exclusive of inventories, used in business of local exchange telephone, telegraph and messenger systems….” This “local exchange telephone company”, as defined by the statute, has typically been read by municipalities and the court to apply only to companies that provide dial tone and access to 51% of a local telephone exchange.
The dispute, which has given rise to multiple Tax Court of New Jersey cases, is whether that 51% threshold is tested every year, or just once, on April 1, 1997, a deadline provided for in another part of the statute. The Tax Court in 2012 had ruled that this test was annual in nature, but a subsequent Tax Court case from 2019 is still under appeal. That case could affect the overall application of the current statute. The plaintiff in both cases is Verizon New Jersey, who has appealed their responsibility for Business Personal Property Tax in a number of municipalities where they believe that they no longer meet the 51% threshold.
This bill, S3209, would remove the 51% test from the statute and would add in language that would make wireless telephone company property subject to the tax levy. The result would be Verizon and any of the other local exchange telephone companies being perpetually on the hook for their telecommunications equipment located in New Jersey municipalities. Any new companies that entered the market would not be subject to the Business Personal Property Tax’s levy on local telecommunications equipment, regardless of whether they had 51% of the dial tone and access in a municipality or not. The wireless telephone company property would still seem to be an annual test, but the bill does not explicitly provide for the annual test. The property subject to taxation under this other provision would be “low-powered radio access node[s]” which have commonly been attached to various utility poles, street lights, and other tall structures so that they could support the company’s wireless network service.
While the bill is pending before the Senate committee, there is still only a limited chance that this bill will become law. Other versions of this bill have been introduced in previous Senate and Assembly sessions and have failed to advance. However, municipalities may push for this bill to move forward as the status quo could be threatened by the result of the 2019 Tax Court case that is currently on appeal. If the courts begin to find that Verizon and other companies are no longer responsible for paying the levy, it could mean many millions of tax dollars lost to municipalities throughout the state.
If you have a question concerning your property tax assessment, the application of New Jersey’s property tax regime or any state property tax programs, contact McKirdy, Riskin, Olson & DellaPelle, P.C. to speak with an experienced attorney who can help you with your matter. A copy of the current Senate Bill is available here.