The telecommunications industry continues undergoing rapid change due to technological advances and deregulation.  The industry that began with the telephone now includes cable, wireless and satellite communications, and the Internet or VOIP.

For almost 100 years until 1984, telephone service was a highly regulated industry in which consumers did not have a choice of provider.  Phone companies were subject to tax under statutes applicable to public utilities, and such taxes in the form of gross receipts, franchise and others.  Specific taxes were passed on to customers as part of the regulatory rate setting scheme. Many monopoly phone companies had no reason to, and normally did not, oppose these taxes.  In the 1990’s, many States began efforts to deregulate local markets and to open these markets to competition to improve consumer choice and, hopefully, lower prices.  In the Telecommunications Act of 1996, Congress further opened local markets.
In most States, the deregulation of the industry was not accompanied by corresponding elimination, simplification, or restructuring of the old monopolistic tax system.  Innovation and convergence of existing technologies are radically expanding what telecommunication services are; blurring the distinction between telephone and Internet services; between cable wireless and satellite communications; between long distance and local service; and, between telephone and other forms of communications.

Many of these new technologies are capable of delivering telecommunications or telecommunications-like services.  As a result, similar services can be delivered by networks that are taxed very differently and for a growing number of new technologies, these services are free from State and local taxation.  This uneven governmental treatment at the State and local level, while not intentional, has led to competitive barriers, discouraged market investment and infrastructure development that is crucial to the future and impacted the rollout of advance telecommunications service throughout the United States.

State statutory design has not kept pace with the telecommunications industry. The myriad taxes and charges on telecommunications were established for an industry that was legally, technologically, and structurally very different than it is today.  Many taxes remain targeted to a specific technology (e.g., telephone taxes or cable franchise fees), despite the blurring of distinctions between technologies that provide similar services (e.g., the telephone and Internet telephony or VoIP).  The convergence of formerly distinct communications technologies renders the existing tax structure difficult to justify in terms of economic efficiency or equity.

New technology convergence and competition in telecommunications makes it critical to simplify and reform State and local taxes to ensure a level playing field and to enhance economic development and avoid discrimination among telecommunications providers.  These reforms have resulted from either legislative changes and/or successful court challenges.

Most recently as a part of the challenge at the judicial level, Qwest was not successful in getting equity treatment for telecoms in Colorado.

WK_Case _ Cases and Rulings in the News States A-M, COQwest Corp v. Colorado Division of Property Taxation, Colorado Court of Appeals, (Aug. 4, 2011)

Silver Oak Advisors’ founders bring over 40 years of Big 4 and Industry property tax experience.  Silver Oak was formed to provide taxpayers in need of State and Local Tax (SALT) assistance, former Big 4 and industry experienced professionals with specific industry and/or property expertise in addition to working knowledge and relationships with the specific taxing jurisdictions.

Contact us for a no-cost/no-obligation review of your real and personal property assessments. Silver Oak Advisors does not utilize staff in these areas. These no-cost/no-obligation reviews are handled by our Directors. We believe you deserve 40 years of Big 4 and industry experience in Complex and Industrial properties and a history of results.

We are working Directors allowing us to provide a higher level of service at a cost effective rate, passing on the savings to you. Contact us for more information.

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