News  Appellate Tax Board Decision Could Result in $26 Million in New Revenue for Cities and Towns

  • Massachusetts Department of Revenue

Department of Revenue releases values of poles and wires subject to local taxation in response to Appellate Tax Board's Verizon case decision

BOSTON - Thursday, May 15, 2008 - The Division of Local Services of the Massachusetts Department of Revenue today released central valuations for poles and wires owned by Verizon and other telephone companies, and an estimate of the property tax revenue that each of the Commonwealth's cities and towns could receive from this property due to a recent decision by the Massachusetts Appellate Tax Board (ATB).

On March 3, the ATB ruled that Verizon New England, Inc. was subject to local property tax on its poles and wires over public ways, a decision which Verizon has said it will appeal.

The estimate of $26 million in new tax collections, based on FY08 and in some cases FY07 tax rates (for those communities who have not yet set a FY08 tax rate), reflects an approximation of the amount of revenue an individual community may collect from this source in FY09.

These figures do not include taxation on telephone company machinery, which DOR estimates could generate an additional $25 million to $50 million in local property tax revenue. The ATB decision in the Verizon case addressed solely poles and wires on public ways, not other types of phone company machinery and equipment.

Because ATB's Order on poles and wires could be reversed on an appeal, DOR continues to advise that cities and towns are most likely not in a position to freely access additional tax revenues that may be collected as a result of the Order; instead, those municipalities will be required to deposit additional funds in their overlay accounts to protect against the possibility of future refunds to the taxpayers.

The ATB's ruling, assuming it is ultimately sustained, is consistent with one of the key elements of Governor Deval Patrick's proposed Municipal Partnership Act. One section of that proposed legislation provides that all poles, underground conduits, wires and pipes, including poles and wires over public ways, are taxable to their owners in the cities or towns where located. That provision would apply to all telecommunications service providers, including those companies providing telephone, cable TV, internet, data, or other services.

For a link to the new valuations, click on .

Attached is an excel spreadsheet estimating the potential value of this new source of taxable property to each of the Commonwealth's 351 cities and towns.
Spreadsheet - Estimated Landline Supplemental Value & Associated New Growth 

Bob Bliss (DOR)

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