Policy Issues Related to Property Tax Treatment of Communications Property
Responding to public criticism of the property tax, many states have adopted strategies to provide property tax relief to residential taxpayers. These programs typically exempt a portion of a homeowner’s property value from taxation (homestead exemption), limit property tax to a percentage of income (circuit breaker), cap the allowable annual growth in property values each year (assessment limitation), or limit taxes to a certain percentage of taxable value (rate limit).
However, as legislators protect residential property owners from increases in property taxes, the burden of taxation is shifted to business taxpayers often with disparate impacts by type of business. In fact, property taxes were nearly 40% of all the state and local taxes paid by businesses in 2021.3 Within the business community, as states compete for capital intensive manufacturing industries and the high-paying jobs they create, there is increasing pressure on legislatures to exempt data centers, specialized manufacturing facilities like microchip fabrication plants and other advanced production facilities. When combined with the growth in “knowledge-based” industries that do not make large capital investments, states trying to preserve the business property tax base are left with relatively few capital intensive industries to tax.
As a result of these market and political pressures, and because of its legacy treatment as a regulated public utility in some states, communications companies bear a disproportionate property tax burden in many states.4 Communications companies must make sizeable investments to keep up with consumer demand for better coverage and higher bandwidth, yet with limited exceptions they do not have the ability to move infrastructure to other states.
Property taxes are a recurring expense for businesses and have a disproportionate impact on businesses like communications providers who must invest frequently to modernize networks. Since communications providers must constantly invest in new equipment to upgrade network quality and speed, any tax reductions that accrue from depreciating older equipment are continuously offset by investments in new equipment. Also, some providers must build out new networks while maintaining old “legacy” networks, which can result in added property tax costs attributable to the taxation of both networks.
As the communications marketplace changes, disparate tax treatment increasingly creates problems of “horizontal equity” – that is, like treatment of competing businesses. Ironically, the massive investment that communications providers have made in increasing the availability and quality of high-speed internet access now makes it possible for non-traditional companies to provide communications services that compete with companies that are classified as communications service providers. As a result, two companies purchasing and deploying the same piece of equipment—a router or switch, for example—may pay significantly different property taxes on the same piece of equipment. That same piece of equipment may also be valued differently based on the type of service provided or the type of business providing the service.
In the 2015 legislative session, the Oregon legislature grappled with this issue as new providers balked at being subject to the same “central assessment” of their communications equipment as communications providers. Instead of eliminating the property tax practices that result in higher taxes on communications providers, the legislature enacted a special provision that kept the new investment of non-traditional providers from being subject to central assessment.
A growing body of economic evidence from the US and abroad suggests that investment in communications infrastructure provides spillover economic benefits for the many businesses that use the infrastructure.5 This evidence suggests that efforts to modernize state property tax systems to treat communications providers like other competitive businesses would have a significant and lasting positive impact on infrastructure investment. This new investment would generate additional property and other tax revenues to offset some of the revenue reduction from eliminating the discriminatory treatment of communications providers. This is especially the case in high-cost rural areas where returns on investment are lower and taxes weigh more heavily in capital investment decisions.
While many legislators acknowledge the need for reform of taxes on telecommunications property, they are faced with the reality that reforms may result in short term reductions in revenues available for schools and local governments or a shift in the tax burden to residential property owner. Several states have addressed this issue by applying property tax policy changes prospectively or by phasing-in property tax reforms. In 2019, Iowa enacted a three-year phase out of its discriminatory property tax on certain telephone companies. Kansas implemented a similar approach over a decade ago, phasing out the taxation of telecommunications personal property only for new property placed in service after the effective date of the law change. Similar phase-ins of property tax reforms were also implemented successfully in Maine and Ohio. In Tennessee, the elimination of discriminatory assessment ratios on telecommunication companies was coupled with the elimination of an income tax credit available to businesses affected by the higher assessment ratios effective June 2017.
The next section highlights actions states have taken to modernize property tax systems to address disparities between property taxes on telecommunications companies and other competitive businesses.
State Enactments Since 2017
Iowa enacted legislation in 2018 to implement a three-year phase-out the discriminatory taxation of transmission property of certain telecommunications companies. Beginning in tax year 2022, transmission property used for telecommunications, cable television, or internet service was fully exempt and no longer centrally assessed by the state. Real property owned by communications providers is now locally assessed.
As discussed in the next section, Mississippi enacted a 10-year property tax exemption for equipment used to provide high-speed Internet access back in 2003. This legislation was extended in 2013 for another six years. In 2019, the Legislature again extended the sunset on the exemption until - 2025.
In 2022, the New York legislature extended until 2026 the cap on the valuations that local assessors can assign to the property of telecommunications network property located on private property (see next section for more detail).
In 2022, the Utah Legislature changed the statute on how telecommunications companies are valued under the unitary valuation method. Telecommunication companies are now assessed by a single entity – the Multicounty Appraisal Trust (MCAT) – on a cost basis.
In 2023, Wisconsin enacted legislation to exempt the personal property of all businesses in the state that are taxed under Chapter 70 of the Wisconsin statutes, including cable providers. However, because telecommunications providers are centrally assessed under Chapter 76 of the Wisconsin statutes, the personal property tax repeal does not apply to telecommunications providers.
Significant State Enactments 2000 - 2017
Some states have implemented reforms to address the discriminatory taxation of telecommunications property or initiated studies to provide recommendations to address the disparate treatment of telecommunications property. Here is a brief overview of these actions:
The Arizona legislature passed SB 1326 into law in 2017 as Chapter 220. The measure determines how depreciation for qualifying broadband infrastructure should be calculated. Qualifying broadband infrastructure is defined as cable, telecommunications equipment and other tangible personal property capable of being used for or in connection with transmission of data at a rate that is equal to four megabits per second in at least one direction. Depreciation of cable and telecommunications equipment would be computed on a straight-line basis using ten and five year lives, respectively. This new law ends the disparate treatment of telecommunications (“landline” and “wireless”) property which was specifically excluded from legislation enacted in 2011 (HB2001) that created an aggressive accelerated depreciation schedule that was limited to commercial and agriculture property.
The Arkansas General Assembly enacted legislation in 2015 (SB683, Act 1118) which excludes the value of intangible property acquired after Jan., 2015 from the determination of the valuation of broadband communication entities for property tax purposes. The legislation applies to providers of commercial mobile radio service, telecommunication and video service, and cable television service.
Connecticut instituted a 100% property tax exemption for all tangible personal property that a certified competitive video service provider acquires on or after Oct. 1, 2007, and on or before Sept. 30, 2010, even if the tangible personal property is used solely or in part in the provision of competitive video programming service. Further, personal property (acquired on or after Sept. 30, 2007) to render both telecommunications service and certified competitive video service is allowed a partial property tax exemption as “dual-use” personal property. A certified competitive video service provider determines the taxable portion of “dual-use” property by deducting an “exemption” from that property’s fully depreciated value.
Delaware legislation enacted in 2012 provides for a two-year income tax credit against the wire and transmitter property taxes paid only by local exchange telephone companies equal to a percentage of the taxpayer’s Delaware communications infrastructure investment cost, coupled with a repeal of the tax altogether effective Jan. 1, 2015. This reform will repeal the 1914 law that was created to tax every corporation engaged in telephonic business in Delaware, but which prior to the phase out applied to only one company.
In Kansas, an income tax credit is allowed for all taxable years commencing after Dec. 31, 2000, for property taxes imposed on property initially acquired and first placed into service in Kansas on and after Jan. 1, 2001. The credit represents the difference between the Property Tax levied at the 33% (Public Utility) assessment rate and the (“Non-Public Utility”) assessment rate of 25%. The amount of the Income Tax Credit which exceeds the Income Tax liability for a taxable year is refunded to the taxpayer. In addition, machinery and equipment acquired by qualified purchase or lease made or entered into after June 30, 2006, is exempt from property taxation for all commercial taxpayers, including telecommunications, wireless and video providers.
Maine enacted legislation in 2000 that reduced the rate for telecommunications tangible property from 27 mills to 20 mills over the period of 2003 through 2009. The six-year phaseout of the higher rates on telecommunications property resulted in rates that are approximately the same as the statewide average for other types of locally assessed property. In 2011, the legislature enacted additional reform measures which repealed the state’s personal property tax and replaced it with a state excise tax on qualified telecommunications equipment. Property assessments for 2012 were subject to a 19.2 state mill rate. For assessments made in 2013 and thereafter, the state tax assessor is required to apply the mill rate of the municipality in which the qualified telecommunication equipment is located. The additional tax reform stemmed from a 2009 working group commissioned to study Maine telecommunication taxes.
Mississippi enacted a property tax exemption for broadband equipment, effective from July 1, 2003 through June 30, 2020, (currently extended through June 30, 2025). This law provides for a property tax exemption for eligible equipment deployed in counties that have elected to participate. The exemption is good for 10 years from the date the equipment is placed in service (e.g., equipment placed in service in 2012 will be exempt from the property tax for 10 years). In addition, the Mississippi Telecommunications Ad Valorem Tax Reduction Fund was established to provide annual refunds to telecommunications companies to partially offset the additional property taxes that some telecommunications providers pay as compared to other competitive businesses.
In 2014, New York enacted a provision where the state sets caps for local assessors in valuing the so-called “outside plant” (e.g., poles and wires) of telecommunications companies that is located on private property. This is intended to bring the treatment of outside plant on private property in line with the treatment of the same property located on public property. The provision was initially enacted as a four-year pilot program to allow the legislature to evaluate the program and decide whether to make it permanent.
In 2005, the Ohio General Assembly enacted a phaseout of tangible personal property taxes imposed upon general business, telephone and telecommunications, and railroad properties over a period starting in tax year 2006 and ending in tax year 2010. Although the tax was phased out for most taxpayers during 2009, it continued to apply to telephone companies and interexchange telecommunications companies through tax year 2010. Starting with the 2007 tax year, telecom companies were defined as general business taxpayers instead of public utilities and their listing percentages phased out as follows: 20% during 2007, 15% during 2008, 10% during 2009, 5% during 2010, and 0% during 2011 and thereafter.
The Oklahoma legislature passed legislation putting forward a constitutional amendment to eliminate the taxation of intangible property for all taxpayers, including telecommunications companies. The proposal was adopted by voters at the general election in November 2012. The amendment was the legislature’s response to a court ruling that all intangible assets – whether owned by a business or an individual taxpayer – were subject to taxation unless specifically exempted in the constitution. This decision would have dramatically expanded the base of the property tax because, prior to the ruling, most business and residential intangible property (other than telecommunications, utility, and railroad property) was not subject to taxation. After passage of the amendment, the Oklahoma Tax Commission revised its methodologies for assessing telecommunications as a unit and accepted fair market value property analysis studies. Oklahoma also reduced the assessment ratio for property used by telecommunications companies to provide video services to equalize it with the ratio applicable to cable providers.
In Tennessee the “Telecommunications Ad Valorem Tax Reduction Fund” was created by statute in 2001. The law provides that money from the fund was to be used to refund a portion of the excess local property paid by local exchange telecommunications companies who are subject to higher assessment ratios than those applied to the property of other business taxpayers. In 2017, the Tennessee legislature passed HB 1367, legislation that ends the use of discriminatory assessment ratios on local exchange telephone companies and telephone cooperatives. These companies will now be assessed at the rate applicable to commercial and industrial property of the same type.
This report highlights the variety of approaches that states have enacted over the last decade or so to modernize their property tax policies related to communications infrastructure. If they have not already done so, states seeking to enact policies favorable to investment in communications networks may want to modernize property tax policies related to communications property. Many states have antiquated property tax systems that have not been modernized since the telecommunications industry evolved from a regulated monopoly marketplace.
Legislatures face significant challenges in balancing the need for modernization of property taxes on communications providers with the short-term revenue implications of such changes on schools and local governments. One way states have addressed this challenge is to phase in property tax changes so that they only apply to new investments.
Appendix A: Summary of State Property Tax Provisions Related to Telecommunications Service Provider Property
All taxable real and personal property in Alabama, except public utility property, is assessed on the local level by the county assessing official. A “classification” system sets assessment ratios for different types of property as follows: owner-occupied residential real property is assessed at 10% of value; business property is generally assessed at 20% of value; and all property of utilities used in the business is assessed at 30% of value. The state’s property tax rate is 6.5 mills for all property types. In addition to statewide property taxes, each county or city government can impose local property taxes and can set its own millage rates.
The Alabama Department of Revenue Property Tax Division sets the standards and procedures for equalization of property values in the counties, and supervises and controls the valuation and assessment of property, and collection of all ad valorem taxes to ensure that property is taxed uniformly throughout the state. Wireless property and cable property are locally assessed as business property at the 20% assessment ratio. Landline property is centrally assessed by the state Property Tax Division as public utility property using unitary valuation at the 30% assessment ratio. The wireline values are then distributed to the local jurisdictions and the property is taxed using the local tax rates. There has been no significant property tax reform legislation for Alabama in recent years.
In Alaska, businesses pay property taxes on real property and personal property. Generally, property is assessed at 100% of full and true value (i.e., fair market value). Intangible personal property is not taxable. Exemptions for inventory vary by locality. Municipalities may elect to exempt business personal property in part. There are few statutory guidelines for valuing property in Alaska, but property may be valued using the cost, income, and market approaches. Assessors typically rely on a basic cost approach (based on original cost) to value business personal property. With limited exceptions, property taxes are assessed, levied, and collected at the local level according to local ordinances.
In Arizona, businesses pay property taxes on real property and most tangible personal property. All commercial taxpayers are subject to tax at 100% of market value, including centrally assessed and locally assessed commercial taxpayers. The Arizona Department of Revenue centrally assesses the property of wireline and wireless providers, as well as public utilities, railroads, airlines, and pipelines, using the unit valuation method. All other taxpayers are valued and assessed by county assessors, primarily using the cost approach.
To determine the fair market value for telecommunications company property under the unit method, the statutes direct the Department to use the cost approach, with specific provisions for determining useful lives and residual values for the types of property owned by such companies. The formula has the effect of valuing telecommunication companies at a higher level than if they were locally assessed, as evidenced by a recent case decided by the Arizona Court of Appeals. [Cable One, Inc., v. Arizona Department of Revenue; 304 P.3d 1098, 1101 n.8 (Ariz. App. 2013)]
In 2017, the Arizona legislature passed SB 1326 which allowed the equipment of cable and telecommunications companies to have the same accelerated depreciation applicable to commercial and agricultural equipment.
All communications providers (including wireless, cable and local telephone companies) are considered “utilities” and are centrally assessed by the Arkansas Public Service Commission. The PSC uses the unit method for valuation and captures intangibles, including the value of Federal Communications Commission (FCC) spectrum licenses required by wireless providers to operate. However, legislation passed in 2015 (SB 683, Act 1118) excludes the value of intangible property acquired after Jan. 1, 2015, from the valuation of broadband communications entities. The intangible value of locally assessed business property is not subject to taxation. There is no difference in the assessment ratios for communications companies as compared to general business.
In California, businesses pay property taxes on real property (including possessory interests) and personal property. Property is generally assessed at 100% of full cash value (i.e., fair market value). Under Proposition 13, assessed values for real property, other than state-assessed real property and possessory interests are limited to an annual inflation factor of no more than 2%, provided there has not been a change in ownership.
Intangible personal property is not taxable, however, according to prior litigation, “indirect” intangibles (i.e., intangibles to which the taxpayer cannot ascribe a portion of the business’s income stream) need not be excluded under the income approach. [Elk Hills Power, LLC v. Bd. of Equalization, 57 Cal.4th 593, 304 P.3d 1052 (Cal. 2013)] Business inventories and software, except basic operational programs, are exempt. Property may be valued using the cost approach (based on replacement, reproduction, or historical costs), income approach, market approach, and/or the stock and debt approach. Possessory interests may be valued using the cost, income, and/or comparative sales approaches but, in practice, typically are valued using the income approach.
In the case of cable franchises, possessory interests generally are valued based on discounted economic rents for the subject franchise over the term of the franchise agreement. Property, except franchises, owned or used by regulated telephone companies (which includes wireless and wireline companies) is subject to central assessment by the California Board of Equalization (BOE). Regulated telephone companies are typically valued using the cost approach; however, the BOE employs unit valuation and is authorized to use all three approaches to value. Cable companies are assessed locally.
In the late 1980’s, the Legislature passed legislation to reduce the administrative burden for processing the billing and apportioning property tax on state-assessed property by establishing a single countywide tax rate area to which all state-assessed property assessed value in the county would be assigned while not changing the amount of property tax paid by the utilities. However, a flaw in the statutory formula to determine the “debt service” portion of utility tax rate has caused the tax rate paid by utilities to deviate from the equivalent rate paid by locally assessed real property. This flaw has resulted in state-assessed property taxpayers to pay significantly more property taxes than what locally assessed taxpayers are paying on the same value.
For example, the unitary tax rate for state assessed property in Santa Clara County is more than double than the average tax rate for locally assessed property. Today, this problem exists in 46 of California’s 58 counties and has resulted in significant excess property taxes being paid annually today. Unfortunately, the problem is not getting better. This matter is currently being litigated.
In Colorado, businesses pay property taxes on both real property and personal property. Business property is assessed based on a 29% assessment ratio, while residential property is assessed at a ratio of 7.96% of market value. The Colorado Division of Property Taxation centrally assesses the property of wireless and wireline providers as well as public utilities, railroads, airlines and pipelines, using the unit valuation method, in which the Division values the entire business enterprise. All other taxpayers, including cable and satellite television companies, are valued and assessed by county assessors, primarily using the cost approach. To determine fair market value under the unit method, the Division uses some combination of the income, market, and cost approaches.
A major difference between Colorado and most other states that use the unit method is that most intangible property, including software, is exempt by statute (39-3-118) for locally assessed taxpayers, but not exempt for centrally assessed taxpayers, other than FCC licenses which are statutorily exempt (39-4-102(1)(b). In a 2013 ruling, the Colorado Supreme Court held that disparities in valuations caused by the different treatment of centrally assessed and locally assessed taxpayers were not unconstitutional. [Qwest v. Colorado Division of Property Taxation, 304 P. 3d 217 (Colo. 2013)]
Connecticut taxes all real and tangible personal property not specifically exempt by statute. Generally, real and tangible personal property are assessed at 70% of fair market value (determined using depreciation schedules with varying floors based on the type of property) and taxed at the rate applicable in the town the property is located. The mill rates range from 10.5 to 74.29 depending on the locality, but most jurisdictions have levies of 40 mills or less. The personal property of some wireline telecommunications companies is subject to a special property tax administered by the state in lieu of local property taxes. The assessment ratio is 70% of the depreciated value (using federal schedules) and the statewide rate is 47 mills, with no valuation floor.
The state imposes a gross receipts tax in lieu of the personal property tax on property used to provide television or video programming services by community antenna television, direct broadcast satellite and certified competitive video service. Property used to provide both telecommunications and video programming is partially exempt from property tax based on the ratio of video programming receipts to total receipts.
Delaware does not tax the personal property of communications companies. However, the outside plant of local telephone companies is taxed under a “Special Betterments Tax.” Special betterments subject to the tax include poles, wires, cable and conduits for distribution of telephone communication services. The special betterments tax does not apply to wireless or cable property. In addition, landline companies face inconsistent application among counties and municipalities with regard to valuations and depreciation of the outside plant.
District of Columbia
Only the real property of communications companies is subject to property tax. Tangible personal property is exempt because telecommunications providers and cable providers are subject to the gross receipts tax. Regardless of the exemption, office equipment and furniture and fixtures are taxable.
In Florida, businesses pay property taxes on both real and tangible personal property. Communications companies are assessed at the county level, where property is valued at fair market value (just value). Most property appraisers use the cost method in determining the value of tangible personal property. In addition, each tax return receives a $25,000 assessed value exemption per county.
In Georgia, businesses pay property taxes on real property and personal property. With limited exceptions, property is typically assessed at 40% of fair market value. Intangible personal property generally is nontaxable. Business inventory is exempt from state-level property taxation, while counties have the option to exempt inventory. (Most counties do not grant the exemption.) County assessors are required to consider the cost, income, and sales comparison approaches for valuing real and personal property. The sales comparison approach must be used to value machinery, equipment, personal fixtures, and trade fixtures if there is a ready market for such property. If a ready market does not exist, county assessors must use the basic cost approach (based on replacement or reproduction cost) to value such property. If the basic cost approach does not adequately reflect physical deterioration or obsolescence or otherwise is not representative of fair market value, county assessors must apply the approach of combination of approaches to value that, in their judgment, results in the best estimate of fair market value.
Property owned by public utilities, including wireline telephone companies, is subject to central assessment by the Georgia Department of Revenue. The department uses unit valuation and the cost, income, and stock and debt approaches, or any combination thereof, when valuing public utility property. Wireless telephone companies and cable companies are assessed locally, and their business personal property generally is assessed using the basic cost approach.
In Hawaii, there is no personal property tax. Businesses pay real property tax to the counties. Hawaii telecommunications service providers are classified as “public utilities”. As a public utility, service providers must collect and remit a 4% “Public Service Company tax” (PSC), imposed on customers’ monthly phone charges, to the state of Hawaii. Counties have been granted constitutional authority to either impose their real property tax on “public utilities” or, alternatively, exempt public utilities from their county’s real property tax and in lieu thereof, impose an incremental, additional PSC addon tax that’s a customer pass-through via billed customer intrastate telecommunications service charges. Rates range from 1.885% to 4.2% depending on county-specific formulas that compute the ratio of gross income to net income. As a practical matter, all counties have elected to exempt telecommunications companies from their real property tax, and have opted to instead impose the PSC tax.
In Idaho, businesses pay property taxes on real property and most personal property. However, intangible property, including custom software, is exempt. All property is assessed at 100% of market value, and there are no classifications. The Idaho Tax Commission centrally assesses the property of wireline providers, as well as public utilities, railroads, airlines and pipelines, using the unit valuation method. To determine fair market value under the unit method, the Department uses some combination of the income, market, and cost approaches.
All other taxpayers, including wireless and cable companies, are valued and assessed by county assessors, primarily using the cost approach. Once a unit value is determined, the Department deducts values for exempt property, including intangible property. In March 2013, the state legislature passed a partial repeal of the personal property tax. The bill exempts the first $100,000 worth of personal property owned by every business in the state in each county of operation. It also exempts all business personal property with an acquisition price under $3,000. In 2021, the legislature increased the exemption to $250,000 and exempted transient personal property from taxation.
In Illinois, businesses pay property taxes on real property. Tangible personal property is not subject to taxation. In Cook County, real property is assessed by the Cook County Assessor. The Cook County assessment ratio for commercial/industrial property is 25%, and real property is revalued every three years. Outside of Cook County, real property is assessed by a township assessor and the assessment ratio for commercial/industrial property is 33.3%. Real property outside of Cook County is revalued every four years.
All real property and tangible personal property is subject to tax. Intangible property, including application software, is exempt from property tax. Inventory is no longer taxed. The distributable property of public utilities, wireless companies and railroads are centrally assessed by the Department of Local Government Finance. For cable companies, the cable assets are locally assessed while the telephony assets are centrally assessed. The department assesses only the property that is directly used to deliver the service (state distributable) and buildings and improvements for railroads. Local assessing officials assess all personal property not directly used to provide the utility service, as well as all land, buildings, and building improvements associated with the public utility. The assessment ratio for all property in Indiana is 100% of value. Regulations establish a floor value of no less than 30% of the adjusted cost of certain depreciable property.
In Iowa, businesses pay property taxes on real property. Personal property, including intangible personal property, is exempt. Prior to 2022, the personal property of certain landline telephone companies was taxable. However, legislation enacted in 2018 began a phase-out of property taxes on transmission property used for telecommunications, cable television, or internet service. Beginning in 2022, when the phase-out was completed, central assessment was discontinued and the responsibility of assessing the taxable real property of communications providers was transferred to local assessors.
In Kansas, all real property and tangible personal property is subject to tax except personal property acquired after July 1, 2006 is exempt from taxation. Intangible property, including application software, is exempt from property tax. The Kansas Department of Revenue assesses the operating property of motor carriers, railroads, regulated telecommunications companies, and utilities. The department uses unit valuation and employs the three approaches to determining value: cost, market, and income. Wireless and cable companies are locally assessed using only the cost approach. With a public utility assessment ratio of 33%, in comparison to an assessment ratio of 25% for commercial and industrial, public utilities assessed values are 24% higher, with associated higher taxes, than locally assessed property.
In Kentucky, businesses generally pay state and local property taxes on real property and personal property. Property is assessed at 100% of fair cash value (i.e., fair market value), which may be determined using the cost, income, and/or market approaches. Tangible personal property owned by providers of multichannel video programming services (i.e., cable companies) and communications services (i.e., wireline and wireless telephone companies) is subject to central assessment by the Kentucky Department of Revenue. Real property owned by said providers is assessed locally.
Centrally assessed tangible personal property of multichannel video programming services and communications services providers must be valued and assessed in accordance with the procedures established for locally assessed property. However, the department has the ability to use unit valuation but generally values property using the cost approach. Providers of multichannel video programming services and communications services became subject to a state gross receipts tax and were excluded from the public service corporation property tax in 2006.
In Louisiana, businesses pay property taxes on real property and personal property. All property is categorized and assessed on the basis of various percentages of fair market value or, in limited circumstances, use value. Depending on the classification, real property generally is assessed at 10% or 15% of fair market value. Business personal property generally is assessed at 15% of fair market value. Property, other than real property, meeting the definition of “public service properties” is assessed at 25% of fair market value. Intangible personal property generally is exempt from taxation; however, intangible personal property meeting the definition of “public service properties” is taxable. Inventory is generally taxable unless held in the state for storage purposes only.
Property may be valued using the cost (based on replacement or reproduction cost), income, and market approaches. Public service operating properties, including immovable, major movable and other movable property owned or used by wireline telephone companies, are subject to central assessment by the Louisiana Tax Commission. The commission applies unit valuation and employs the cost, income, and market approaches when valuing centrally assessed property. Wireline telephone company property typically is assessed using the cost approach. Wireless telephone companies and cable companies are assessed locally, and their property generally is assessed using the cost approach.
All personal and real property is subject to taxation in Maine. Generally, intangibles are not subject to taxation with the exception of software, which is taxable. The assessment of property owned by cable and satellite companies is the responsibility of the local assessor. Maine Revenue Services is responsible for the assessment and taxation of wireless and wireline telecommunications property. This includes valuing all taxable property according to “just value” of fair market value and applying the current municipal mill rate to the value of the assessed property. The municipal mill rates range from 0.85 mills to 29.43 mills, with a statewide weighted average mill rate of 12.66 mills.
In Maryland, businesses pay property taxes on real property and personal property. Most real property typically is assessed at 100% of phased-in full cash value (i.e., fair market value), while most personal property typically is assessed at 100% of full cash value. Intangible personal property is nontaxable. Commercial inventory generally is exempt from state-level taxation but may be taxable at the local level. Property may be valued using the cost, income, and sales comparison approaches, although most personal property is valued using the cost approach (based on acquisition cost). Public utility operating property is subject to assessment by the Maryland Department of Assessments and Taxation.
When valuing public utility operating property, the department uses unit valuation and considers the earning capacity of the operating unit and all other factors relevant to a determination of value of the operating unit. Wireline telephone companies are classified as public utilities for property tax purposes. Property of wireless telephone companies and cable companies is taxed like the property of an ordinary business. Providers of VoIP service typically are assessed by the department if they file a tariff with the Maryland Public Service Commission.
The outside plant (poles, wires, cable and conduits) of landline telecommunications companies is assessed by the Department of Revenue using the cost approach. Network equipment used to provide telecommunications service is exempt from property tax. Even though telephone and telegraph companies are centrally assessed, every owner and board of assessors to whom any valuation was certified may, on or before the 15th day of July, file an appeal of the valuation. Wireless company and cable company property is valued by local jurisdictions, also using the cost approach.
In Michigan, all real and personal property is subject to tax unless a specific exemption applies. Intangible property is exempt from taxation. Michigan assesses property using a classified system which includes six real property and five personal property classifications including Industrial, Commercial and Utility. All taxable property must be assessed at 50% of true cash value, the state equalized valuation. Under a 1994 amendment to the state constitution, taxable value may not rise by more than the lesser of the increase in the consumer price index or 5%. Real property assessments principally use sales and cost data to establish assessment changes. Personal property assessments use acquisition costs adjusted by depreciation multipliers.
Landline telephone companies are classified as public utilities and are subject to state assessment on the value of all real and tangible personal property at the average statewide tax rate paid by other commercial, industrial, and utility property owners in the preceding calendar year. Public Utilities that make broadband investments are allowed a credit equal to 12% of the taxpayer’s eligible investment in equipment capable of carrying 200 kilobits per second in two directions, subject to certain limitations; as well as a credit that is equal to certain telecommunication rights-of-way maintenance fees paid, subject to certain limitations and carry forward provisions. Telecommunications property not classified as utility property, including wireless and cable property, is classified as commercial property and is assessed by local assessors.
In Minnesota, businesses pay property tax on real property only. For the purposes of property taxation, real property includes land, buildings, structures, improvements, or other fixtures upon it, and the right to  occupy,  sell,  lease,  enter,  give away, or  borrow against the real property. Real estate is taxed based upon its market basis by each individual county. Minnesota has a classification system for assessment which ranges from 0.5% to 2.0%. Commercial and Industrial real estate is assessed at 1.5% for the first $ 500,000 in market value and 2.0% for the excess. Agricultural land has the lowest assessment at 0.5% while residential property is assessed between 1.0% to 1.25%. This results in business property being valued and taxed at 1.6 to 3 times more than agricultural land and residential property.
In Mississippi, business property taxes are paid on both real and tangible personal property, while intangible property is exempt. Wireless property is assessed at the local level. Wireline and cable property is centrally assessed using the unit valuation approach. Assessors can determine fair market value by using income, cost, or market approaches. The state does not mandate which approach must be used. Once fair market value has been determined, Mississippi law provides that telecommunications providers be subject to a 15% assessment ratio for both real and business personal property. This compares to public service corporation assessment ratios of 30% and residential ratio of 10%. Therefore, communication service provider rates are roughly comparable to most businesses in the state.
Mississippi exempts broadband network equipment from property taxes for the first 10 years after it is placed in service. The provision was originally enacted in 2003 with a 10-year sunset. The sunset has been extended three times, most recently in 2019 for five years (current sunset date of June 30, 2025).
In Missouri, all real property and tangible personal property is subject to tax. Intangible property, including application software, is exempt from property tax. The operating property of motor carriers, railroads and utilities are centrally assessed using unit valuation and the three approaches to value. Wireless and cable companies are locally assessed. For locally assessed property, equipment purchased after Jan. 1, 2006, must be depreciated using the IRS Cost Recovery Code (MACRS).
The personal property assessment ratio is 33 1/3% and the real commercial property assessment ratio is 32%.
In Montana, businesses pay property taxes on both real property and tangible personal property. The property of telecommunications companies is taxed based on an assessment ratio of 6%, while most commercial and industrial property is assessed at a 3% ratio, although additional classifications also exist. The Montana Department of Revenue centrally assesses the property of wireless and wireline providers, as well as public utilities, railroads, airlines and pipelines, using the unit valuation method. To determine the fair market value under the unit method, the Department uses some combination of the income, market, and cost approaches. Unlike the majority of states, the cost approach includes operating leases. An intangible property deduction is made for each valuation method prior to arriving at the correlated unit value. Once the correlated unit value is determined, the Department allocates a percentage of this value to Montana. The Department then deducts values for other exempt property such as vehicles, locally assessed property like operating leases on real property, and cable. Fiber optic or coaxial cable installed or placed in service on or after July 1, 2021 is exempt from tax for five years after which the exemption is phased out at a rate of 20% per year over the next five years until the property is assessed at 100% of its taxable value after a 10 year period. The property of other taxpayers is assessed by the Department’s county offices, primarily using the cost approach. While the state has a statutory exemption for intangible property, the restrictive manner in which the intangible exemption is applied by the Department was challenged by taxpayers in court [Gold Creek Cellular of Montana Ltd. and AT&T Mobility, LLC vs. Department of Revenue, 372 Mont. 71 (2013)]. The Montana Supreme Court ruled that the Department’s regulations defining goodwill and intangible personal property were invalid because they conflicted with the statutes. Software is specifically defined as intangible in state statute.
Legislation enacted in 2023, which takes effect in 2024, sets the schedule for the central assessment of certain property every two years in the odd-numbered year. This would include telegraph, telephone, and microwave property and the allocations of centrally assessed telecommunications companies. Newly enacted legislation would also increase the class eight business tax exemption for furniture, fixtures, and equipment used in commercial establishments, as well as radio and television broadcasting and transmitting equipment, and cable television systems.
In Nebraska, businesses pay property taxes on tangible personal property and real property. The state of Nebraska Department of Property Assessments uses central assessment by unit valuation for public service entities which includes landline and wireless telecommunications providers. Cable television is locally assessed like other business property. Income, market, equity residual and cost approaches are all used to compute the unit value for telecommunication businesses. Although there is constitutional authority to tax intangibles in Nebraska, there is no current statute imposing a property tax on intangibles. Nebraska taxable value is defined as the actual value of real property and franchise where applicable and the net book value of tangible personal property. The Nebraska taxable value is determined by the sum of the unit value allocated to Nebraska less a deduction for the actual value of the tangible personal property, plus the net book value of all the tangible personal property of the entity allocated to Nebraska. The net book value of tangible personal property is determined by applying the appropriate Nebraska depreciation factor to the Nebraska adjusted basis.
In Nevada, businesses are either locally or state assessed and pay property taxes on taxable tangible real and personal property. Business and residential property are assessed at 35% of the total assessed value/taxable value at a rate no greater than $3.66 per $100 of assessed value. Many jurisdictions are currently at or near the maximum rate. Business property that physically crosses the state or county lines and is used directly in the operation of a business such as telephone companies (except those that deliver video and wireless communications), gas and electric utilities, airlines, carlines, and railroads are state assessed and valued by the Nevada Department of Taxation. The taxable value of state assessed property shall not be any greater than the replacement cost less depreciation (RCNLD) of the system value.
Under local assessment, land property values are estimated from market sales or other recognized appraisal methods and buildings are estimated at replacement cost new less depreciation. The land value is added to the improvement’s taxable value to arrive at the property’s overall taxable value. Business personal property values are determined by the county assessor based on the Nevada Tax Commission regulations which establish the standards for determining the “cost of replacement” and schedules of depreciation based on the expected life, ranging from three to 30 years. “Cost of replacement” is determined by the cost of all improvements, any additions or renovations of the personal property, excluding routine maintenance and repairs added to the cost of acquisition. Acquisition cost is the actual cost to the present owner including transportation and installation, but excluding sales tax.
Tangible personal property is not taxable in New Hampshire, but some communications property (e.g. towers, wireless arrays, and cabinets) are taxed as real property.
The tangible personal property of landline telephone companies is taxable for the telephone company with a market share of 51% or greater. If the market share dips below 51% in any jurisdiction in a given year, by statute, a landline telephone company no longer has to pay property tax for its tangible personal property. The property of wireless providers and cable companies is not taxable in New Jersey but land and buildings are taxable for all businesses at the local level.
In New Mexico, businesses pay property taxes on real property and most tangible personal property. All commercial taxpayers are subject to taxation at 33.33% of market value, including centrally assessed and locally assessed commercial taxpayers. The New Mexico Taxation and Revenue Department centrally assesses the property of wireless and wireline providers, as well as public utilities, railroads, airlines and pipelines, using either a cost approach or, if elected, a unit valuation methodology, in which the department values the entire business enterprise that provides the relevant service.
All other taxpayers, including cable companies, are valued and assessed by county assessors, primarily using the cost approach. To determine the fair market value under the unit method, the department uses some combination of the income, market, and cost approaches. Intangible property is not explicitly exempt by statute in New Mexico, but is regarded as non-taxable by regulation since only tangible property is subject to tax. New Mexico law does have special valuation methods for many industries, and gives communications companies an election to use only the cost approach.
The taxation of communications property varies widely in New York. There are several types of property taxes that are applied in varying ways to the communications sector. While New York does not generally tax tangible personal property, the state considers cell towers, lines, wires, poles, electrical conductors, fiber optic equipment, and related equipment to be real property. Landline companies and cable companies are subject to a real property tax on “Special Franchise” property which is centrally administered and assessed using the reproduction cost method by the Office of Real Property Tax Services (ORPTS). The Special Franchise property tax applies to equipment located on public property. In addition, Nassau County and New York City have a “split roll” which requires higher taxes on the “utility” class which includes landline telephone companies. Wireless companies and cable companies are assessed locally for their real property (land and buildings, e.g., towers).
In North Carolina, businesses pay property taxes on real property and personal property. Most property is assessed at 100% of true value in money (i.e., fair market value). North Carolina provides a list of specifically exempted properties, including most intangible personal property and business inventory. Software, other than embedded or software purchased or licensed from an unrelated entity that is capitalized on the taxpayer’s books, is nontaxable. In addition, effective for tax years beginning on or after July 1, 2014, software developed or modified to meet customers’ specified needs is exempt from tax. Property is typically valued, whether centrally or locally assessed, based on one or more of the cost, income, or market approaches. Under the cost approach, costs are generally based on GAAP historical costs. Property owned by telephone companies is subject to central assessment by the North Carolina Department of Revenue.
For taxable years beginning on or after July 1, 2015, property owned by mobile telecommunications companies is subject to central assessment by the Department. The Department is authorized to use unit valuation when valuing centrally assessed property. The department considers the cost, income, and stock and debt approaches when valuing centrally assessed property, however, the Department may only use the cost approach (replacement, reproduction, or GAAP historical cost) when valuing the tangible personal property of a mobile telecommunications company. Cable companies are assessed locally, typically under the cost approach to value.
Personal property is exempt from property taxes in North Dakota, except the personal property of entities that are assessed by the State Board of Equalization. These state-assessed entities include railroads, investor-owned public utilities, pipelines, and airlines.
Telecommunications companies—defined as entities that provide two-way communications—are subject to a 2.5% tax on their adjusted gross receipts in lieu of property tax on all real and personal property used by the telecommunications carrier in its telecommunications operations. Cable television and other services offering one-way transmission, including radio or television signals for broadcast purposes, video programming or other programming are not considered telecommunications service for purposes of the gross receipts tax. Real property used in those operations is subject to local assessment.
In Ohio, businesses primarily pay property taxes on real property. In 2005, the Ohio Legislature implemented a four-year phaseout of the property tax on business tangible personal property such that the tax was effectively eliminated beginning with the 2009 tax year. With respect to telecommunications companies, the tax on tangible personal property was effectively eliminated beginning with the 2011 tax year. Intangible personal property is generally nontaxable, and inventory is effectively exempt as a result of the phase-out of the tax on intangible personal property.
Real property generally is assessed at 35% of true value in money (i.e., fair market value) except for certain land devoted exclusively to agricultural use. County assessors may consider all three approaches (cost, income, and market) to value property, but county assessors typically rely on the cost approach. Land may be valued using any combination of four methods—the market data method, the allocation method, the land residual method, and the development method—with the market data method being the preferred method. Wireline and wireless telecommunications companies and cable companies are assessed locally.
In Oklahoma, businesses pay property taxes on both real property and tangible personal property. The Oklahoma State Tax Commission centrally assesses the property of wireless, wireline, and video programming providers using the unit valuation approach. To determine the fair market value under the unit valuation approach, the tax commission is permitted to use either the income, market, or cost approaches. However, a 2012 Constitutional amendment approved by the voters exempts intangibles from the property tax. The Tax Commission must subtract intangible values before determining fair market value if the taxpayer provides certain information for determining intangible value. Once fair market value is determined, Oklahoma law provides that “public utility” property (which is defined to include the property of communications providers) is subject to an assessment ratio of 22.85%. This compares to the county assessment ratios that by law must be between 10% and 15% for other business and residential taxpayers. As a result, real estate and personal property of communications service providers is taxed at rates approximately 1.5 to 2.3 times higher than businesses that are not considered public utilities. Real property is assessed and taxed by the local jurisdictions.
In Oregon, businesses pay property taxes on both real property and tangible personal property. All property is assessed at 100% of market value, and there are no classifications. The Oregon Department of Revenue centrally assesses the property of wireless and wireline providers as well as public utilities, railroads, airlines and pipelines, using the unit valuation method, in which the Department values the entire business enterprise that provides the relevant service. All other taxpayers are valued and assessed by county assessors, primarily using the cost approach.
To determine fair market value under the unit method, the department uses some combination of the income, “stock and debt,” and cost approaches. Centrally assessed taxpayers (except railroads) are taxed on their intangible property, while locally assessed taxpayers receive an exemption for their intangible property. FCC licenses, whether owned or leased by a centrally assessed or locally assessed taxpayer, are exempt from taxation and deducted from reconciled unit value.
In 2014, the Oregon Supreme Court upheld the department’s decision to change the assessment of companies that provide data transmission services by whatever means from local to central assessment. [Comcast Corporation v. Department of Revenue, 356 Or. 282 (2014)] In 2015, Oregon enacted legislation exempting the value of franchises and satellites, continuing the intangibles property tax exemption for wireless licenses, and providing a limited exemption for certain other intangible property. The legislation also exempts “data center” assets from central assessment for businesses that use less than 10% of their total property in the business of communications and provides an intangibles exemption for symmetrical gigabit broadband services. In 2020, railroads won the case in 9th Circuit of appeals exempting their intangible personal property. Taxation of intangibles for railroads was ruled “discriminatory” [ BNSF Railway Co. v. Oregon Department of Revenue, No. 19-35184 (9th Cir. 2020)].
The property tax is imposed on the real property of general business at the local level. Pennsylvania law grants counties, cities, boroughs, townships, and school districts the authority to impose tax. The rate of tax is based on the aggregate of all the local levying bodies within whose jurisdiction the real property is located. Pennsylvania law does not subject personal property to tax. Pennsylvania exempts from local property tax the real property of a public utility, which includes local exchange providers. However, real property is subject to the public utility realty tax at the state level. The tax on public utility realty is applied to each dollar of state taxable value assigned to the property at the end of the preceding calendar year.
State taxable value is the current market value as calculated by adjusting the assessed value of the property for county real estate taxes for the common level ratio of assessed values to market values of the county, as established by the State Tax Equalization Board after July of the taxable year. The millage rate is calculated by the Department of Revenue by dividing the amount of the total realty tax equivalent, which is the amount of real estate taxes that the local taxing authority could have imposed on utility realty but for the utility realty tax, by the total state taxable value of all utility realty located in Pennsylvania.
In Rhode Island, businesses pay property taxes on real property and personal property. Property generally is assessed at full and fair cash value, or at a uniform percentage thereof, not to exceed 100%, as determined by local assessors. Intangible personal property is exempt from taxation. Inventory is mostly nontaxable. Valuation methods for real property depend on the locality, but real property typically is valued using the cost, income, and market approaches. Tangible personal property is valued based on the original purchase price (new or used) including all costs such as freight and installation. Lines, cables, conduits, ducts, pipes, machines and machinery, equipment, and other tangible personal property of cable and telecommunications corporations, used exclusively in the carrying on of the business of the corporation, are exempt from local taxation, but are subject to central assessment by the state. Cable and telecommunications corporations report the value of their tangible personal property based on original cost less accumulated depreciation (with a 25% floor), to which the Department applies an average assessment ratio and average tax rate.
In South Carolina, businesses pay property taxes on real property and personal property. All property is categorized in several classifications and assessed on the basis of various ratios of true value in money (i.e., fair market value). South Carolina has an assessment ratio of 10.5% applied to the fair market value of manufacturing property, utility property, and business personal property.
Most intangible personal property is nontaxable. Business inventory generally is exempt from taxation. Utility property may be valued using the cost, income, and market approaches, while manufacturing property and general business personal property is valued using a cost approach using a fixed statutory depreciation percentage that is deducted each year until a residual value is reached. For purposes of the cost approach, costs can be based on replacement cost new or GAAP historical costs depending on the type of filer. Property owned or used in the conduct of a wireless or wireline telephone business or cable business is subject to central assessment by the South Carolina Department of Revenue. The department is authorized to use unit valuation when valuing centrally assessed property.
Personal property of most businesses is exempt in South Dakota. Local exchange telephone companies and wireless providers are subject to a 4% gross receipts tax in lieu of the property tax. The Department of Revenue is responsible for assessing the property of companies that provide long distance service in South Dakota. The property is assessed by the department in July and the taxable value is then certified and sent to the counties in August. The counties determine and collect the tax at the same rate and at the same time as locally assessed property.
All real and personal property other than public utility company property in Tennessee is assessed by county assessors. The State Board of Equalization establishes policies and procedures for local assessors of property and hears property appeals beyond the county level. Wireless and wireline property, including intangible property, is assessed by the state Office of State Assessed Properties. Annual renditions are required only for public utility property and locally assessed business personal property (due April 1 for public utilities and March 1 for all other businesses). The assessment ratio for the different classes of property is established by state law. Assessments are based on a percentage of fair market value of the property as of Jan. 1.
Prior to 2017, the assessment ratios were as follows: public utility including wireline providers (real and personal property) – 55%; commercial and industrial (40% on real property and 30% on personal property); farm – 25%; and residential – 25%. The county commission and city governing bodies determine local property tax rates. The property taxes are collected by county trustees and city collecting officials. Cable companies are assessed locally as commercial property. In 2017, the legislature enacted HB 1367 which eliminated the discriminatory assessment ratio on wireline companies. The legislature also repealed provisions enacted in 2001 to create the “Telecommunications Ad Valorem Tax Reduction Fund.” This fund had been used to provide tax credits to wireline providers for the discriminatory taxation that resulted from the higher assessment ratios. Since the higher assessment ratios were eliminated, there was no need to continue the fund. A temporary privilege tax on certain telecommunications providers, also adopted in 2017 as part of the transition, sunsetted at the end of 2022.
In Texas, businesses pay property taxes on real property and personal property. Property other than certain special-use property is assessed at 100% of fair cash market value. Most intangible personal property, including software, is nontaxable. Inventory is taxable. Assessors must consider the cost, income, and market approaches for valuing property, however, assessors primarily use the cost approach. Under the cost approach, costs typically are based on replacement cost new and/or GAAP historical cost. Most businesses, including wireless and wireline telecommunications companies and cable companies, are assessed at the local level.
In Utah, businesses pay property taxes on real property and most tangible personal property. The Property Tax Division of the Utah Tax Commission centrally assesses the property of railroads, airlines and pipelines, using the unit valuation method, in which the division values the entire business enterprise that provides the relevant service. All other taxpayers, including cable and satellite television providers, are valued and assessed by county assessors, primarily using the cost approach.
All commercial taxpayers are subject to tax at 100% of market value, including centrally assessed and locally assessed commercial taxpayers. To determine the fair market value under the unit method, the division uses some combination of the income, market, and cost approaches, although use of the market approach and its “stock and debt” adaptation is discouraged by a Tax Commission rule. Once a unit value is determined, the Property Tax Division deducts values for exempt property, including intangible property. Counties have a right to appeal Division assessments only if they can prove that the valuations are off by more than 50%, and challenges from the counties are less common than in the past. There has been considerable litigation concerning the issues of what intangible property is exempt and how to exclude it from the unit, particularly goodwill.
In 2022, Utah enacted reforms that changed the assessment of telecommunications from unitary assessment to local assessment. This reform eliminated the disparity between the tax treatment of telecommunications property and cable property. Telecommunication companies are now assessed by a single entity—the Multicounty Appraisal Trust (MCAT)—on a cost basis.
In Vermont, most businesses pay property taxes on real property and personal property. Property generally is assessed at 100% of fair market value. In the case of business personal property, a town may provide that such property is to be assessed at (1) 50% of its cost (with a 10% floor), or (2) at its net book value (with a 10% floor), at the election of the taxpayer. Most intangible personal property is nontaxable, and a specific exemption exists for money, securities, mortgages, and other evidences of debt. Municipalities, at their discretion, may elect to not tax business inventory. Valuation methods for real and personal property vary from locality to locality, but the cost (based on replacement cost), income, and market data approaches are used. Real and personal property, except land and buildings, used in carrying on a telephone business in Vermont is exempt from local taxation.
Each person or corporation owning or operating a telephone line or business in Vermont, excluding resellers of telephone transmission capacity who do not own or operate and telephone lines or transmission facilities in the state, are subject to central assessment by the Vermont Department of Taxes, Division of Property Valuation and Review. This state-imposed tax is imposed on the net book value of all personal property of the owner or operator located in the state. Cable companies are assessed locally. A state-imposed education property tax is also levied on all nonresidential property. Real and personal property, except land and buildings, used in carrying on a telephone business in Vermont is exempt from the education property tax. Cable companies are subject to the education property tax.
In Virginia, businesses pay property taxes on real and personal property. Typically, real and personal property is assessed at 100% of fair market value, however, assessment ratios can vary by locality. Most intangible personal property and inventory are exempt from taxation. Tangible personal property used in the cable television business, other than machines and tools, motor vehicles, delivery equipment, trunk and feeder cables, studio equipment, antennae and office furniture and equipment, is treated as exempt intangible personal property. Of the three generally accepted approaches to value, local assessors primarily use the market data approach to value real property and the cost approach (based on original cost) to value personal property.
The Virginia State Corporation Commission, Division of Public Service Taxation, is responsible for assessing the real and tangible personal property of public service corporations, including wireline and wireless telephone companies. The Commission is authorized to use the cost, income, and market approaches when valuing property of public service corporations, however, it generally uses the cost approach (based on original cost) to value telephone property.
Centrally assessed property is taxed at the real estate rate applicable in the respective locality, which tends to be lower than business personal property rate. Cable companies are assessed locally, but providers of VoIP service are treated as telephone companies and subject to central assessment if they hold a certificate of convenience and necessity granted by the Commission.
In Washington, businesses pay property taxes on both real property and tangible personal property. All property is assessed at 100% of market value, and there are no classifications. The Washington Department of Revenue centrally assesses the property of wireless and wireline providers, as well as public utilities, railroads, airlines and pipelines, using the unit valuation method. All other taxpayers, including cable companies, are valued and assessed by county assessors, primarily using the cost approach. To determine the fair market value under the unit method, the department uses some combination of the income, market and cost approaches. Once a unit value is determined, the Department deducts values for exempt property, including intangible property. The taxable fair market value is then equalized with the property values of other commercial property. A telecommunications company has pending litigation challenging a department rule that limits the exemption in a way that is inconsistent with the statute. [AT&T Mobility v. Department of Revenue, Case No. 14-2-00280-4 (Thurston County Superior Court.)]
In West Virginia, most businesses pay property taxes on real and personal property. Most property is assessed at 60% of its true and actual value (i.e., fair market value). Intangible personal property has been exempt from taxation since 2003. FCC licenses are not taxable, while inventory generally is taxable. With certain exceptions, real and personal property is valued using one or more of the three generally accepted approaches to value—the cost, income, and market approaches. Owners and operators of telephone lines, wholly or in part, within the state are subject to central assessment by the West Virginia Board of Public Works, with the West Virginia State Tax Department issuing estimates of tentative assessed values for the board’s consideration in establishing final values. Non-operating real property of such owners and operators is assessed locally. The State Tax Department considers the cost (based on original cost), income, and stock and debt approaches when valuing telephone operating property, which primarily includes properties that are considered by the FCC as part of the rate base for ratemaking purposes. The State Tax Department also applies unit valuation. Cable companies are assessed locally.
All real property is subject to tax. The personal property of most businesses in Wisconsin, including cable companies, is exempt from property tax under Chapter 70 of the Wisconsin Statutes. Railroads, air carriers, pipeline companies, public utilities, and telecommunications companies are centrally assessed by the state and taxed under Chapter 76 of the Wisconsin statutes. Personal property assessed under Chapter 76, except for intangible property, is taxable. However, in 2019, the legislature enacted a law that provides an exemption for “qualified broadband service property” installed in rural or underserved areas of the state, as determined by census data.
The assessment ratio for all taxable property in Wisconsin is 100%.
In Wyoming, businesses pay property taxes on both real property and tangible personal property. The Wyoming Department of Revenue centrally assesses the property of wireless and wireline providers, as well as public utilities, railroads, pipelines, cable companies and satellite television companies using the unit valuation method. All other taxpayers are valued and assessed by county assessors, primarily using the cost approach. To determine the fair market value under the unit method, the Department uses some combination of the income, market, and cost approaches. Once a unit value is determined, the Department deducts values for exempt property, including intangible property. The property of industrial companies and centrally assessed companies is taxed based on an assessment ratio of 11.5%, while most commercial and industrial property is assessed at a 9.5% ratio. Wyoming amended its intangible exemption in statutes in 2008 and now has a very broad definition of “intangible property” eligible for the exemption.
Appendix B:  NCSL Resolution on Communications Network Equipment Exemption Executive Committee Task Force on State and Local Taxation6
Whereas, American consumers increasingly rely on high-speed communications networks in their everyday lives for work, entertainment, emergency communications, and other purposes; and
Whereas, communications networks have become an integral part of the business process for millions of American businesses in sectors as diverse as agriculture, health care, manufacturing, retail, transportation, and many others; and
Whereas, communications networks, both wired or wireless, have become integral to the delivery of government services and have the potential to allow for more efficient and cost effective delivery of government services; and
Whereas, the United States is a technology leader with respect to wired and wireless broadband deployment; and
Whereas, this technology leadership has allowed American businesses to lead the way in the global marketplace in areas such as applications development, “cloud-based” services, and the utilization of software in the communications networks; and
Whereas, the rapid adoption of new communications technologies by American businesses and consumers requires the investment of tens of billions of dollars to keep pace with the exponential growth in demand for network capacity; and
Whereas, state economic growth and competitiveness is dependent upon the deployment of modern, efficient communications networks; and
Whereas, a 2013 study by Ernst & Young confirmed what many prior economic studies have concluded – that the taxation of business inputs results in tax pyramiding, economic distortions, and a lack of transparency in the tax system; and
Whereas, a study by Dr. Raul Katz at Columbia University found that (1) sales taxes on communications network investment reduce economic growth by increasing the cost of investment and slowing communications network investment, and (2) that the elimination of sales taxes on communications network investment in the states that impose such taxes could increase economic growth by $33 billion and lead to the creation of 243,000 jobs in 3 years; and
Whereas, the National Conference of State Legislatures supports the policy goal of encouraging deployment of high-speed communications networks across all states, including rural and underserved areas;
Be it therefore resolved, that the National Conference of State Legislatures recommends that states who wish to encourage broadband deployment consider exempting communications network equipment from the sales and use tax.