PROVIDENCE – Verizon New England Inc. is asking the state’s high court to review its so far unsuccessful legal challenge asserting it is owed a $21.3 million tax refund for the years 2009 to 2014.
State law mandates that at the end of each calendar year, telecommunications companies must declare the value of their depreciable tangible personal property within the state. For calendar years 2009 through 2014, Verizon paid in full but later disputed the assessments, according to court filings.
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The wireless company has argued that the administrator for the R.I. Division of Taxation erroneously assessed an “excessive” tangible personal property tax by using the depreciated value of Verizon’s equipment based on the “settled book value” of the assets, rather than on Verizon’s internal appraisal relying on fair market value.
Verizon contends its accumulated depreciation should consider “physical deterioration, functional obsolescence and economic obsolescence,” which under current statute is not applied to telecommunication companies’ tax liability.
After an initial appeal, in 2018 the tax administrator upheld the original assessment of Verizon’s tangible personal property tax and denied its request for a lower assessment.
The state district court later ruled against Verizon’s appeal, finding that depreciation of property “should be interpreted as an objective loss in value due to deterioration and age,” and not include “external factors such as economic and functional obsolescence.”
Because the tangible property tax is collected and then dispersed to municipalities according to population, in 2019 the city of Providence intervened in the case, asserting it would stand to lose up to $2 million for every tax year under question.
The city’s attorney, Robert K. Taylor of Partridge Snow & Hahn LLP, said the parties are now waiting on a decision from the Supreme Court on whether it will review Verizon’s latest appeal.
“They have been pursuing this for some time,” he said. “And they every right to appeal.”
Taylor said the consequences of the case could go beyond the initial $21.3 million claim. If Verizon is successful in reversing the district court decision, it will likely move to claw back tax refunds for the later years.
“That would impact all communities in Rhode Island,” he said. “But there would still be additional proceedings to determine the dollar amounts at play.”
According to court filings, the General Assembly could have amended the statute in 2016 and 2017 to include Verizon’s proposed methodology, “but chose not to.”
The attorney listed for Verizon New England, Thomas P. Quinn, managing partner at McLaughlinQuinn, did not immediately respond for comment.
It was not immediately clear the total value of assets Verizon holds in Rhode Island. In a 2018 press release, Verizon claimed to have invested more than $311.5 million in the state over the previous three years. In August the company announced it had completed the latest phase in a series of network upgrades within East Providence, Cranston, Pawtucket, Providence and North Providence.
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com
