ASSEMBLY, No. 2329
STATE OF NEW JERSEY
INTRODUCED SEPTEMBER 19, 1996
By Assemblywoman FARRAGHER and Assemblyman DeCROCE
An Act concerning the taxation of personal property used in the business of telecommunications service providers, amending R.S.54:4-1 and repealing section 19 of P.L.1989, c.3.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. R.S.54:4-1 is amended to read as follows:
54:4-1. All property real and personal within the jurisdiction of this State not expressly exempted from taxation or expressly excluded from the operation of this chapter shall be subject to taxation annually under this chapter. Such property shall be valued and assessed at the taxable value prescribed by law. Land in agricultural or horticultural use which is being taxed under the "Farmland Assessment Act of 1964," P.L.1964, c.48 (C.54:4-23.1 et seq.), shall be valued and assessed as provided by that act. An executory contract for the sale of land, under which the vendee is entitled to or does take possession thereof, shall be deemed, for the purpose of this act, a mortgage of said land for the unpaid balance of purchase price. Personal property taxable under this chapter shall include, however, only the machinery, apparatus or equipment of a petroleum refinery that is directly used to manufacture petroleum products from crude oil in any of the series of petroleum refining processes commencing with the introduction of crude oil and ending with refined petroleum products, but shall exclude items of machinery, apparatus or equipment which are located on the grounds of a petroleum refinery but which are not directly used to refine crude oil into petroleum products and shall include the tangible goods and chattels, exclusive of inventories, used in business of [local exchange telephone, telegraph and messenger systems, companies, corporations or associations subject to tax under P.L.1940, c.4 (C.54:30A-16 et seq.), as amended,] providers of telecommunications services offering telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used, and shall not include any intangible personal property whatsoever whether or not such personalty is evidenced by a tangible or intangible chose in action except as otherwise provided by R.S.54:4-20. As used in this section, ["local exchange telephone company" means a telecommunications carrier providing dial tone and access to substantially all of a local telephone exchange]"telecommunications" means the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received. Property omitted from any assessment may be assessed by the county board of taxation, or otherwise, within such time and in such manner as shall be provided by law. Real property taxable under this chapter means all land and improvements thereon and includes personal property affixed to the real property or an appurtenance thereto, unless:
a. (1) The personal property so affixed can be removed or severed without material injury to the real property;
(2) The personal property so affixed can be removed or severed without material injury to the personal property itself; and
(3) The personal property so affixed is not ordinarily intended to be affixed permanently to real property; or
b. The personal property so affixed is machinery, apparatus, or equipment used or held for use in business and is neither a structure nor machinery, apparatus or equipment the primary purpose of which is to enable a structure to support, shelter, contain, enclose or house persons or property. For purposes of this subsection, real property shall include pipe racks, and piping and electrical wiring up to the point of connections with the machinery, apparatus, or equipment of a production process as defined in this section.
Real property, as defined herein, shall not be construed to affect any transaction or security interest provided for under the provisions of chapter 9 of Title 12A of the New Jersey Statutes (N.J.S.12A:9-101 et seq.). The provisions of this section shall not be construed to repeal or in any way alter any exemption from, or any exception to, real property taxation or any definition of personal property otherwise provided by statutory law.
The Director of the Division of Taxation in the Department of the Treasury may adopt rules and regulations pursuant to the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) as may be deemed necessary to implement and administer the provisions of this act.
(cf: P.L.1992, c.24, s.3)
2. Section 19 of P.L.1989, c.3 (C.48:2-21.15) is repealed.
3. This act shall take effect immediately and shall first apply to assessments of business personal property to be entered on each tax list and duplicate on January 10 next following enactment by at least 180 days.
STATEMENT
This bill subjects the business personal property of telecommunications service providers to the property tax. Currently, the only tangible personal property subject to the local property tax in this State is the personal property used in the business of local exchange telephone companies that are also subject to the public utility gross receipts and franchise tax. Historically, telecommunications providers serving different regulated sectors of the changing telecommunications industry have been subject to different taxes. This bill seeks to advance tax parity under the local personal property tax for all telecommunications service providers as deregulation of the industry under the federal "Telecommunications Act of 1996," Pub.L.104, c.104, unleashes competitive market forces in previously limited market-based segments of that industry. Under that law, cable television companies will be able to move into the telecommunications industry and long-distance telephone companies and local-service telephone companies will be permitted to enter into each other's fields. The convergence of different providers into one service industry will blur the distinctions among the types of telecommunications providers upon which different local tax burdens were based. By extending the local personal property tax to all new telecommunications service providers, the competitive disadvantage of a tax imposed on only one part of the market is removed.
Extends local personal property tax to business property of all telecommunications service providers.