FairPoint Communications and other phone companies are taking legal action against towns and cities across the state to challenge a tax on telephone poles that they say is unconstitutional and unfairly assessed.
The telecommunications providers recently filed petitions in several courts seeking property tax breaks on their 2012 tax bills after they were assessed a tax on their poles and conduits that for many years were considered personal property and exempt from local taxation.
“We just feel like we pay our fair share of local tax and this is another layer of taxation,” said Jeff Nevins, spokesman for FairPoint Communications.
The action comes three years after a state law prohibiting municipalities from taxing poles and conduits owned by telecommunications companies was repealed.
Most towns and cities began including poles and conduits as taxable real estate on the 2011 tax bills while others held off until the 2012 bills were issued.
The phone companies challenging the bills include FairPoint, Granite State Telephone Inc., and Dunbarton Telephone Company, a small family-owned phone service provider.
The companies requested property tax abatements from the municipalities, but in most cases they were denied so they took the cases to court.
The new pole tax is costing FairPoint an additional $6.5 million a year in property taxes, Nevins said. FairPoint has tried to recover about half of that by passing it on to its customers through a surcharge.
Meanwhile, Dunbarton Telephone Company, which serves nearly 1,500 customers in Bow, Dunbarton, and Goffstown, has decided not to charge customers a fee to help with the pole tax — at least not yet.
“I’m trying not to do that to my customers, but I’m not sure how long I can continue to do that. The taxes are pretty significant for our company. We’re trying to absorb that ourselves and it’s very difficult,” said Stephen Nelson, controller and regulatory manager of Dunbarton Telephone Company.
The phone companies also claim that the method the municipalities use to assess the tax isn’t fair and that there needs to be a uniform assessment method.
Nevins said FairPoint’s poles in Nashua were assessed at $277 while the same pole in Tuftonboro was $587.
“A pole is a pole is a pole. There’s nothing unique about a pole. We’re not pleased to pay another tax, but given the fact that it’s in place we’re in a position where we want to make sure there is some consistency and there are communities that we firmly believe have been excessive in the methodology they’ve used to come up with a number,” Nevins said.
In addition to the pole tax, municipalities tax telephone companies for their land and buildings and many also tax for use of the municipal rights of way to locate their poles and other equipment.
The phone companies argue that taxing the use of the rights of way while also taxing the poles and other equipment “effectuates unconstitutional double taxation,” according to the court petitions filed by their law firm, Devine, Millimet & Branch.
The town of Greenland is one of the many municipalities headed to court over its pole tax against FairPoint. While it had the opportunity to tax the poles in 2011, Town Administrator Karen Anderson said the town didn’t have its inventory completed in time so the pole tax was assessed for the first time in 2012.
Anderson said she expected FairPoint, which filed as many as 180 tax abatements this year, would appeal after Greenland denied the abatement.She argues it’s only fair that phone companies are taxed for the poles since electrical utilities have paid a pole tax for many years.
“It does seem like it’s an equity issue. If you tax one company for lines running through the street they should all be taxed,” she said.
Steve Hamilton, director of the property appraisal division at the state Department of Revenue Administration, said municipalities are following the law by assessing the tax, but that the value is often contested.
“The towns have a duty to make sure that every taxpayer is paying their share based on the value of their property. Disputes about the value of the property are local matters that are resolved in the individual town and then they may be appealed if the taxpayer doesn’t agree with the decision,” he said.