New Law Could Make Verizon Pay a Decade's Worth of Taxes It Avoided (arstechnica.com) 98
Verizon has avoided paying local taxes on telecom equipment in many New Jersey municipalities over the past decade, but a proposed state law would force the company to pay back taxes for all the payments it didn't make. Ars Technica reports: The bill, filed on May 23 by Assemblyman John Burzichelli (D. Paulsboro), "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," The Philadelphia Inquirer reported. As of 2015, Verizon had reportedly stopped paying the tax in more than 150 of the 565 municipalities in New Jersey.
The tax Verizon has avoided ranges from $15,000 to more than $1 million a year for each municipality, taking revenue away from local budgets or forcing residents and other businesses to cover the shortfalls. Despite not paying tax in many cities and towns, local officials point out that Verizon "continues to benefit from the use of municipalities' poles, utility lines, and switching facilities even when it no longer pays taxes," a 2015 Inquirer article said. "The tax dispute centers on a 1997 amendment to state tax law that required 'business personal property' payments from landline phone companies that provide 'dial tone and access to 51 percent of a local telephone exchange,'" the report adds. Verizon said in 2008 that it would stop paying the tax because it said its market share had dropped below the 51 percent threshold. In reality, Verizon's share was closer to 90 percent.
The tax Verizon has avoided ranges from $15,000 to more than $1 million a year for each municipality, taking revenue away from local budgets or forcing residents and other businesses to cover the shortfalls. Despite not paying tax in many cities and towns, local officials point out that Verizon "continues to benefit from the use of municipalities' poles, utility lines, and switching facilities even when it no longer pays taxes," a 2015 Inquirer article said. "The tax dispute centers on a 1997 amendment to state tax law that required 'business personal property' payments from landline phone companies that provide 'dial tone and access to 51 percent of a local telephone exchange,'" the report adds. Verizon said in 2008 that it would stop paying the tax because it said its market share had dropped below the 51 percent threshold. In reality, Verizon's share was closer to 90 percent.
Re: would they pay (Score:1)
What about Mae Ling Mak?
Re:Gubbermint (Score:4, Insightful)
you can't change a law and make people retroactively owe money.
Indeed. Ex post facto laws are clearly unconstitutional (Clause 3 of Article I, Section 9 of the United States Constitution).
New Jersey can sue to enforce existing law, but new laws can't have retroactive effect.
We should have public spankings for legislators that pass crap like this. Unfortunately, that is also unconstitutional [wikipedia.org].
Re:Gubbermint (Score:5, Informative)
You guys have the reading comprehension of a toadstool.
The law under which the tax liability arose was passed in 1997.
Verizon paid taxes in accordance with the law until 2008.
Starting 2008, they claimed falsely that their share of the market was low enough that they didn't have to pay taxes.
In reality, their share never went below the 51% threshold, ipso facto their refusal to pay was tax evasion, and their liability for the taxes due has been accruing steadily since that time.
All this law seeks to do is to close a loophole whereby Verizon is forcing the state to litigate each year's tax assessment, even though the underlying facts and their liability has already been established and has not materially changed from year to year.
Also want to add that enforcing a preexisting tax liability does NOT fall under the penumbra of the Eight Amendment, as it does not constitute a fine or punishment. Verizon could perhaps argue a 14th Amendment due process violation, but they'd be facing an uphill battle, as in administrative matters like taxation, the Due Process standards are pretty loose, and pretty much any court would say that the original hearings should suffice if the underlying facts haven't materially changed from year to year.
Re:Gubbermint (Score:4, Informative)
BeauHD carries much of the blame for his half-assed writeup, claiming: "Verizon has avoided paying local taxes". Key word: "avoided". Tax avoidance and tax evasion are two *VERY* different things; as any real editor who had any business working on anything related to taxation or finance would know and correct. By incompetently claiming that Verizon has avoid those taxes, versus evading them, BeauHD literally claimed that these are not taxes that are legitimate owed. And in that case, concluding that this is an attempt at ex post facto retroactive taxation is perfectly reasonable.
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Don't blame him too much, the other side of the coin is that evasion is a crime that although I wouldn't be at all surprised that a large corporation committed, they weren't convicted for it. He couldn't call it alleged since there's no question they did it.
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In the UK you can only go back 7 years from the date of the start of the investigation. By the sounds of it Verizon have been in dispute over these takes since the get go and have been dragging it out. The new law makes it much harder if not impossible for them to drag it out.
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In the U.S. the clock stops when an investigation starts. Investigations and civil trials have been going on for years.
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All this law seeks to do is to close a loophole
They can close the loophole, but they can not apply the change ex post facto. It can only apply going forward.
If they claim the loophole never actually existed, they can sue Verizon and argue their case in court based on the law in place at the time, but not on the new law.
Re: Gubbermint (Score:3)
Dude, don't you know the Constitution was repealed in 2001? What does that old tourist attraction have to do with the real operation of the kangaroo courts?
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So let's not pretend corporation don't engage in the same type of behavior.
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That didn't stop Bill Clinton's income tax increase from applying to the time already passed when the increase became law. The modern courts are corrupt toadies dedicated to government power.
Re:Gubbermint (Score:5, Insightful)
Re:Gubbermint (Score:5, Informative)
I clicked the link to the text of the bill, and you are correct.
From the bill:
a. In 1997, through the enactment of P.L.1997, c.162 (C.54:10A-3 et al.), the Legislature approved an amendment to R.S.54:4-1 ...
b. The Tax Court in Verizon New Jersey Inc. v. Borough of Hopewell, 26 N.J. Tax 400 (Tax Ct. 2012), incorrectly construed the statutory changes made in P.L.1997, c.162 (C.54:10A-3 et al.) to mean that the language of R.S.54:4-1 required that a telecommunications company has to meet the 51 percent test every year as of the assessment date in order for the business personal property tax to be assessed and levied by the municipality in which the business personal property was located. Subsequent to that decision, a trial was held in the Tax Court to establish whether Verizon met the 51 percent test for tax year 2009. On January 28, 2019, the Tax Court found in favor of Hopewell Borough that Verizon did in fact meet that threshold for tax year 2009, and owed Hopewell Borough the tax. However, Hopewell Borough is now faced with the cost of litigating Verizon's tax appeals filed for every tax year subsequent to 2009 up to, and including, the current tax year, and the possibility of litigating annual tax appeals that may be filed by the company in each tax year. Also, all of the other municipalities in the State in which the business personal property of telecommunications companies is located will face the same costs, and uncertainty, of litigating tax appeals as well. The taxpayers of these municipalities will bear the burden of paying legal fees to defend the assessment of business personal property taxes, and will have to endure increased property tax burdens if this business personal property tax cannot be imposed. This taxpayer burden is not what the Legislature intended.
c. The Legislature is greatly concerned that the Tax Court's interpretation of R.S.54:4-1 is burdensome to the judiciary and the affected municipalities; and imposes unnecessary fiscal uncertainty on the budgets of those municipalities and the property taxpayers in those municipalities. This burden and uncertainty is not what the Legislature intended to result from the 1997 amendments to R.S.54:4-1. Therefore, the Legislature has determined that corrective legislation clarifying the Legislature's intent in 1997 to stabilize the taxation of business personal property in perpetuity is necessary and appropriate, and shall be accomplished by establishing in R.S.54:4-1 the responsibility of a telecommunications carrier which held the regional monopoly on landline service before the market was opened to competitive local exchange carriers by the federal Telecommunications Act of 1996, or the corporate successors of such a local exchange telephone company, to pay business personal property taxes to the municipalities in which the property is located.
(emphasis added)
This is exactly what the legislature is supposed to do when a Court gets it wrong. You can't change the law retroactively, but you regulate how the Courts interpret the law, and that change happens now, and affects the assessments that the Court makes in the future even if the behavior at issue in the case happened in the past.
This is all well-trodden stuff, don't be credulous of neckbeards stamping their feet about the Constitution. They don't read anything serious, they only read opinion pieces and newsvertainment.
The real stinger though is later:
2. (New section) In any court proceeding involving a local exchange telephone company and a municipality concerning the taxation of business personal property pursuant to R.S.54:4-1 where the municipality is the prevailing party following a court decision, settlement, or other resolution of that proceeding, the municipality, and any related amicus entities, shall be awarded attorney's fees as costs to the local exchange telephone company.
This will tend to limit frivolous litigation of every single tax bill. 10 years of litigation is expensive.
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the prevailing party [...] shall be awarded attorney's fees as costs
One would think that should almost always be the case in civil suits... Loser pays. Over here, a judge may and very often does award reimbursement of legal fees along with the verdict, but it’s not by default. The judge decides if and how much the losing party pays, so there’s no stacking your legal team or hiring the most expensive litigators in hopes that your opponent will bow out when he potentially will have to pay for all that.
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In places with the system you describe it also discourages hiring a high quality team for an important case. All you're doing is shifting the problem to the judge; maybe the judge will grant a big fee, maybe a small fee. Reducing predictability is often harmful to the process. In the US, if you stay on the ethical high ground, then normally each party pays their own fees and can predict and choose the costs in advance. In certain cases where one party not only lost, but was on ethical low ground, then they
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The big problem with "loser pays" is that the bar to win or lose is rather low in civil suits. Attempting to make the process more principled can therefore make it more ethical sometimes, and less ethical other times, with a larger variation in results. That isn't obviously better.
I can't say that I agree with that offhand, and I don't think (short of actually knowing) that our legal system suffers from this deficiency. But it's a very interesting perspective nonetheless, one that deserves a closer look at least.
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I don't think (short of actually knowing) that our legal system suffers from this deficiency.
That belief is why the American legal system will continue to be the beacon of justice in the western world; Europeans always think their system is better, even when it returns low quality results. They don't measure success, they measure their feelings about the principles which they attempted to implement. In America we don't tell ourselves the system is already perfect, we know that the whole premise of a third party resolving disputes is uncertain and very messy.
Re:Gubbermint (Score:4, Informative)
As per the bill, they did go after them in 2009 and won in court. The problem is the courts interpreted the 1997 bill in such a way that they'd need to win a court case to prove that Verizon had >51% every single year, which is expensive and unnecessarily burdensome. So the 'new' bill is in fact just a clarification of the 1997 bill. They're not changing the rules as such, just how they're measured.
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If Verizon is lying, go after them.
They did. It cost one municipality $200,000 to get $38,655. Now, I'm no lawyer so I don't know if the bill actually says this, but it sounds like they may simply be codifying into law something which says they don't need 9 additional lawsuits to get their taxes (1 for each additional year).
Re:Gubbermint (Score:4, Insightful)
"If Verizon is lying, go after them. But you can't change a law and make people retroactively owe money."
And yet, there's a long, long, history of the feds doing exactly that (or less often retroactively lowering) with income taxes. Within a year, decade, century - that's just an arbitrary timeframe, they're the government and are here to help.
But, if Verizon defrauded, then they shouldn't only be going for back taxes, but penalties and interest.
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But, if Verizon defrauded, then they shouldn't only be going for back taxes, but penalties and interest.
Which in long run won't mean anything. Verizon is a company so it's practically immune from being punished. Sure, they will lose some money but that will be passed along to their customers.
Better plan. Let's make corporate executives directly responsible for the crimes their corporation commits. Your corporation has a chemical leak that kills thousands, because of poor maintenance or some such shit. As CEO you don't get to sit back on your fat ass and say sorry while tossing corporate money at the p
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Nothing, just a bad example.
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I don't disagree with the general point you were trying to make, but in this and many other cases, simply having corporate fines and penalties consistently exceed the profit is sufficient. The key is consistency, so there's a high risk/low reward, and markets can work properly.
And yes, while it's true that companies simply pass such costs on to the consumers, doing so makes them less competitive, which is its own penalty.
America needs European style laws (Score:3)
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Great - but that means you should need to establish a separate contract with every person in the country before you are allowed to push pollution out your smokestack or tailpipe - after all it's *their* air your polluting.
And of course, for every other usage of currently public goods as well. You want to send radio waves through the the airspace above my property? You'd better have a contract with me first. Noise? Drainage? You name it.
If you don't require that, then all you've done is hand over all publ
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Sure. But what's the motive for a company selling widgets primarily to Chinese customers, and employing primarily white, professional workers, to not dump toxic waste all over the black side of town?
That's a motte and bailey (Score:2)
The "bailey" here that companies violate the law but get off on a technicality. The "motte" (e.g. the position you're falling back on because it's easy to defend) is that if we did that we must apply those rules to individuals and their smoke stacks rather than to the companies that sell the cars. But it does not follow that we must punish a consumer and in fact we don't. VW just cheated on emissions a
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Verizon should simply refuse to pay, and dare shitty New Jersey to kick them out, leaving them without telecom service.
Re:Gubbermint (Score:5, Insightful)
Verizon should simply refuse to pay, and dare shitty New Jersey to kick them out, leaving them without telecom service.
Great ideal, if Verizon was the only telecom service. All this would do is leave a big hole in the New Jersey area for someone like AT&T or one of the others to take over. The state would just cease Verizon assets in the area and auction time off to the highest bidder.
So bad ideal for Verizon, good ideal if you are the state and competition telecomms.
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In English, please.
(ideal/idea, cease/seize, time/them, ideal/idea, ideal/idea)
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The thing is, Verizon Wants out of the Telecom business, at least in landline communications.
1) They separated their Landline and Wireless companies to two completely separate subsidiaries years ago. This is why you couldn't pay a landline bill at a Verizon store, or merge a wired and wireless bill. My guess is this is how they were skirting this tax, by claiming landline was not associated with wireless, especially with dwindling wireline numbers. (I'm assuming that FIOS is not in this area.)
2) They've bee
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And if they avoided paying by lying that they didn't need to pay, then that should be a civil suit and not a new law.
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That's not what they're doing. Verizon knew it owed the tax, and lied to create an illusion that they didn't. The new law just strips away the lie. They always owed the tax.
TFA points out that at least one township took them to court and prevailed.
Re:This smells bad (Score:5, Informative)
No Verizon was caught lying in one district, over a decade ago. The court battle over that year's taxes for that district raged on for the following decade, up until just now. During that time it was discovered that not only had they lied across the board in hundreds of other districts during that time, they had also grossly misinterpreted the law in the first place. All that's now being introduced is a new law to clarify that the other 180 or so districts don't have to each fight another 10-year court battle for each individual year of back taxes Verizon evaded, and that Verizon has to pay the outstanding court fees accrued as well.
Yes because we need more money (Score:1, Troll)
I'm not a big fan of property taxes. Ostensibly on most of what's taxed the business has already paid a use or sales tax on. The revenue generated from it is taxed and so on. Still if other businesses are taxed uniformly then Verizon obviously owes the money. Unfortunately it's a drop in the bucket and won't fix anything because the bloated municipalities won't put it to anything meaningful except paying for over-generous pensions or debt.
Government is a part of the checks and balances... (Score:1)
Your narrative isn't absolute truth.
Humans are beings that use tools. One of these tools is capitalism, which facilitates the distribution of resources when there is a division of labor.
Unregulated and unrestricted capitalism is like a wild undomesticated animal, the beast will typically do more harm than could. However, a domesticated beast can be used efficiently to significantly increase the production capacity of a single individual.
Government is the primary means which we use to attempt to tame the be
Re:Yes because we need more money (Score:5, Interesting)
I'm not a big fan of property taxes.
I am a big fan.
Compared to the alternatives, property taxes are progressive, more fair, and have fewer perverse incentives.
Property taxes are especially efficient when implemented as land-value taxes, which Milton Friedman described as "the least bad tax". And Milton Friedman was never wrong about anything.
Property taxes should be higher. Income taxes should be lower. Payroll taxes should be eliminated.
Re: Yes because we need more money (Score:1)
All that does is encourage people to illegally pack 35 "family members" into a single unit dwelling.
Re: Yes because we need more money (Score:5, Informative)
All that does is encourage people to illegally pack 35 "family members" into a single unit dwelling.
Land-value taxes encourage the efficient use of land, so less will sit idle, and more will be turned into houses and apartment buildings.
Property taxes tend to be progressive, since the rich have a greater percentage of their wealth in land. Payroll taxes tend to be regressive. Their elimination will encourage people to work, and encourage employers to hire. So a shift from payroll taxes to property taxes, will mean the 35 Filipinos living next door will have more money for housing, not less
Why economists love property taxes and you don't [bloomberg.com].
Comment removed (Score:4, Insightful)
Comment removed (Score:4, Interesting)
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Land-value taxes encourage the efficient use of land, so less will sit idle, and more will be turned into houses and apartment buildings.
I think undeveloped countryside is pretty, so fuck efficiency.
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Yes, absolutely. Inefficient exploitation of natural resources results in lower GDP, we all lose.
Or gain. I like to think it's a net gain.
Re: Yes because we need more money (Score:2)
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So no Potys property taxes aren't better because people avoid paying them and have turned it into a cottage industry. Look up industrial development agency and other ways developers can avoid paying property taxes.
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I'm not a big fan of property taxes.
I am a big fan.
You are neither a farmer nor a retiree.
Also, pay back infrastructure tax breaks.. (Score:5, Insightful)
Verizon also should be forced to pay back all of the infrastructure tax breaks they got for rolling out the Fios network and then abruptly giving up on it so they could prioritize wireless. They were given billions of tax dollars to build fiber infrastructure throughout the US.. then they stopped building it.. then they sold it to Frontier in some 'Toys R Us' style structure.
Also, hanging all of Verizon's board of directors for the past 20 years would be nice along with crucifying most of their management. Maybe I'm a little harsh - but I couldn't think of anything appropriate enough.
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Also, hanging all of Verizon's board of directors for the past 20 years would be nice along with crucifying most of their management. Maybe I'm a little harsh - but I couldn't think of anything appropriate enough.
Maybe we could give them to China as part of any future trade pact, on the condition that they not be granted passports?
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Nothing is retroactive. They're just clarifying that the protracted many-year legal battle fought by one municipality to claim 1 year of taxes Verizon had illegally evaded, does not have to be fought again in full for each of the hundreds of other municipalities and many years that they have evidence Verizon also evaded their taxes in.
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Was this a valid tax to begin with? (Score:2)
All else aside, this tax is a bad idea. A profoundly and foolishly greedy idea intended to extract more revenue from already over-taxed residents (Verizon is just going to bill cust
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