The Legislature’s Committee on Revenue has scheduled a public hearing for June 21 on legislation that would close loopholes in property tax law that are being used by telecommunication companies to avoid paying local taxes.

The MMA-supported legislation, H. 2408, would remove the outdated exemption for telephone company machinery and for poles and wires located over public property. Poles and wires over private property are taxable.

The loophole-closing legislation is a priority for cities and towns from all parts of the state to protect the local property tax base and to avoid shifting property tax burden from telephone companies to other local taxpayers.

Unlike electric utility companies that pay local taxes on personal property (mainly generators and turbines), telephone companies that are corporations are exempt and pay no local taxes on high-value machinery, such as switching equipment and routers. Recently, some tax-paying telecommunications companies not previously classified as telephone companies or not organized as corporations have become telephone companies. The result has been the loss of property value from local tax rolls and increased tax burden for other business and residential taxpayers.

In a memorandum sent to municipal assessors last month, the state’s Division of Local Services warned that some cities and towns will see decreases in taxable telephone company valuation due in part to changes in legal status of some telecommunication companies and “transfers of previously taxable telephone machinery to leasing companies.”

– John Robertson