In a classic case of David versus Goliath, Hopewell Borough has won its fight to require Verizon to pay business personal property taxes on property that it owns in the town.
The New Jersey Tax Court ruled last month that Verizon must pay taxes on the fiber optic cable and electronic equipment housed in a building that it owns and that is used as a switching station for the telecommunications company.
Hopewell Borough officials were pleased with the New Jersey Tax Court decision, which was issued Jan. 28 and that put an end to a lengthy battle with Verizon that began in 2008.
“After the trial, we were confident that the Tax Court would agree with us,” Hopewell Borough Mayor Paul Anzano said.
“I am very satisfied that we were able to get an outcome that was fair to our taxpayers,” Mayor Anzano said.
While the case was making its way through the legal system, Verizon paid the tax. In 2009, it paid $39,414.30, and continued to pay the tax – up to and including 2018, when it paid $55,392.55. It has paid $13,848.14 to date this year on property assessed at $1.89 million.
The disagreement dates to 2008, when Verizon told Hopewell Borough and other municipalities that it would not pay taxes on the cables and electronic equipment that were housed in the local switching stations.
Verizon was relying on a 1997 statute that allowed it to exempt itself from paying business personal property taxes on the cables and related equipment if it determined that it did not supply dial tone service to 51 percent or more of an area’s landline telephones.
Hopewell Borough did not accept Verizon’s position and challenged it. The two sides disagreed on what constituted the Hopewell telephone exchange. The town claimed it was based on the geographic boundaries shown on Verizon’s tariff and product guide exchange maps.
After listening to testimony from experts for Hopewell Borough and Verizon, New Jersey Tax Court Judge Mary Brennan ruled that the Hopewell telephone exchange is based on Verizon’s tariff and product guide exchange maps.
Mayor Anzano said that when Hopewell Borough first received notice from Verizon that it would no longer pay the tax because it was providing less than 51 percent of dial tone service to the town, “intuitively, it did not feel right to me.”
After doing some research and consulting a few experts, what he discovered reinforced his initial reaction, Mayor Anzano said. Hopewell Borough would be doing its residents a disservice if it did not pursue the issue, he said.
“It was not lost on me that Hopewell Borough, with its $3 million budget, was going to take on a very large utility that could easily spend $3 million on coffee cups and cozies. With the support of Hopewell Borough Council, the town initiated the litigation,” Mayor Anzano said.
The mayor praised attorney Joseph Tauriello, who represented Hopewell Borough in New Jersey Tax Court, and added that Hopewell Borough officials became quite familiar with the technical workings of Verizon.
The New Jersey League of Municipalities also praised the New Jersey Tax Court decision, noting that it provides a framework that can be used by other towns seeking to ensure payment of business personal property taxes.
“We commend the Hopewell Borough Mayor and Borough Council for their toughness and integrity throughout this battle,” said Fanwood Mayor Colleen Mahr, who is the president of the New Jersey League of Municipalities.
“Their perseverance has well served the interests of the ordinary taxpayers of Hopewell Borough and, hopefully, the rest of the state,” Mayor Mahr said. Verizon has exempted itself from paying the business personal property tax in many New Jersey towns, in addition to Hopewell Borough.
But the New Jersey Tax Court cautioned that in future decisions regarding such exemptions, the credibility and weight given to experts’ analysis and methodology will be “fact-sensitive” and will likely vary from year to year.