South Jersey Assemblyman John J. Burzichelli (D., Paulsboro) had just finished reading an Inquirer article on Hopewell Borough’s epic tax fight with Verizon Communications in late February when he ran into the borough’s mayor, Paul Anzano, in Washington.

“What can I do to help?” Burzichelli asked.

On Thursday, Burzichelli came through as he proposed legislation in Trenton that would force Verizon to pay local taxes on telephone poles, lines, land, and other equipment that the telecom giant has refused to fork over in an increasing number of New Jersey municipalities, starving them of tens of millions of dollars a year in tax revenue.

“People are starting to realize that they’re not alone with this,” Burzichelli, chair of the Assembly’s powerful Appropriations Committee, said Thursday. He said the bill’s prospects to pass are “very good.”

The proposed legislation not only forces Verizon, one of New Jersey’s biggest corporations, and other legacy phone companies to pay the business personal property tax, but they must pay it retroactively to 2009.

Verizon has claimed it doesn’t have to pay tax if its market share of landline phone service in a town falls below 51 percent because of the explosive growth of mobile phones and cable phone service.

But that wasn’t what the Legislature meant to do, Burzichelli said. The law required Verizon and legacy phone companies to pay the business personal property tax into perpetuity if they had 51 percent of the market share in 1997 — without a subsequent market share test, Burzichelli said.

N.J. Towns Challenge Verizon on Taxes

Verizon has claimed it doesn’t have to pay tax if its market share of landline phone service in a town falls below 51 percent, but the N.J. municipalities shaded below are fighting the telecom giant in court.

Click on the map for more information.
Staff Graphic

Verizon has hired skillful lawyers and the courts have misinterpreted the legislature’s intent, Burzichelli said. Verizon declined to comment.

Hopewell Borough has been taking on Verizon in the courts for about a decade over the business personal property tax, which would cost Verizon about $40,000 a year. Hopewell estimates that it has spent about $200,000 fighting Verizon.

In January, New Jersey Tax Court Judge Mary Siobhan Brennan ruled that Verizon must pay the local tax to Hopewell after a trial revealed that Verizon had substantially underestimated its market share. Instead of the 44 percent to 48 percent of the borough that Verizon claimed to serve with landline phone service, Verizon’s share was closer to 90 percent, she concluded.

But even though Verizon lost, the telecom giant could still challenge the tax annually using the 51 percent threshold for 2010 and subsequent years. Not only that, Verizon has appealed the January court decision.

If Verizon loses on appeal, it could petition the New Jersey Supreme Court, which means that litigation for the 2009 tax could last 15 to 20 years, Mayor Anzano said.

Verizon’s strategy has been to grind down the borough with legal bills and set a precedent for municipalities across the state, Anzano said. “They ran up the bill, they ran the clock, and they extended the case,” Anzano said. “They made every objection possible."

The stakes are high for Verizon in New Jersey and for the towns. When Anzano researched the issue, he discovered that phone companies — Verizon and others — had stopped paying the local tax in towns in 29 of the state’s 40 legislative districts.

More than 100 towns have challenged in court the phone company decisions to stop paying the tax, he said.

“I didn’t realize how extensive it was and it showed that a fix required a legislative solution and not a solution of trial by trial by trial,” Anzano said.