Verizon Wireless: Not a telegraph or telephone company
So said the Massachusetts tax board recently after it reviewed a 2004 case over whether Verizon Wireless was entitled to a property tax exemption. The tax exemption was originally put in place about 92 years ago to encourage the spread of telegraph and then telephone wires across the state. The telecom industry, of course, vehemently opposes any repeal of the exemption, and particularly Massachusetts Governor Deval Patrick's proposal to remove the personal tax for telephone company property.
The Massachusetts Department of Revenue offers up a few dollar figures that might clarify the situation: In 2007, Verizon Wireless was taxed on $4.1 million worth of property versus a potentialÃƒâ€šÃ‚Â $492.8 million in fiscal year 2008. Nextel similarly jumped from $1.9 million in property in 2007 to $55.5 million in fiscal year 2008. T-Mobile USA had $142,900 worth of taxable property in 2007 versus $101.2 million in fiscal 2008. Fiscal year 2008 began July 1.
Like most telecom regulations, this is not a cut and dry case. There are many courts, regulatory bodies and departments involved. In 2005, the Massachusetts Supreme Judicial Court ruled that telecom companies would not qualify for tax exemption if they were organized as limited liability companies. So, they reorganized to make the cut.
Boston taxed Verizon Wireless on $93 million worth of property in 2004 and collected $3 million, however, in 2005 it was a different story. After it reorganized and qualified for the exemption, Boston taxed the carrier on only $274,900 worth of property and its tax bill dropped to $8,984.
You'd be hard-pressed to find someone who works in the telecom industry, particularly the wireless industry, who wouldn't readily admit that it is fast-paced and continually evolving. A nearly century-old law is certainly out-dated, by any measure.
"We're dealing with statutes that go back to 1915, and we're trying to tax what's a very modern telecom industry," said Ronald Rakow , commissioner of assessing for Boston. "The whole system is so outdated--all kinds of different court decisions; it's really kind of a train wreck."
The conversation taking place in Massachusetts is similar to ones continuing all over the country. Sure, wireless carriers are still building out bigger and better networks, but is it in the same spirit as the original telegraph and telephone network build-outs early last century? Can the old laws be re-purposed or is it time to start anew given the current landscape? I'd like to hear your suggestions. -Brian