New Jersey Senate Bill S1586

New Jersey 2022-2023 Regular Session

• Introduced: 2/14/22
• Refer: 2/14/22

Caption

Concerns local taxation of business personal property of local exchange telephone companies.

Impact

The introduction of SB 1586 is poised to restore fiscal stability to municipalities that rely on property taxes from telecommunications companies. By clarifying that these companies are obliged to pay taxes on their business personal property, the bill seeks to prevent the erosion of the local tax base, which has reportedly resulted in financial burdens on other property taxpayers. Legally mandated fees for attorney costs incurred by municipalities in tax disputes with these companies will further support local governance by placing financial responsibility squarely on the telecommunications corporations involved.

Summary

Senate Bill 1586 addresses the taxation of business personal property owned by local exchange telephone companies in New Jersey. The bill is a response to a legal interpretation made in a Tax Court case (Verizon New Jersey Inc. v. Borough of Hopewell) that inadvertently undermined the intended property tax obligations of these companies. It clarifies the definition of local exchange telephone companies, ensuring they remain liable for property taxes irrespective of the percentage of service they provide in specific municipalities. This legislation intends to stabilize local tax bases affected by the previous court's decision, directly impacting municipal revenue and budgeting processes.

Contention

Supporters of SB 1586 argue that clear language in state law preventing companies from evading taxes is necessary for the fiscal health of local governments. However, there could be opposition from telecommunications lobby groups expressing concerns about increased operational costs that may result from strict taxation, which they might argue could affect service affordability. The bill's support stems from a shared legislative intent to safeguard local tax revenues intended for community services and infrastructure while balancing the needs of businesses operating within these jurisdictions.