Cell Phones vs. Landlines: Verizon NJ Still Pays the Township $400,000

The onslaught of cell phones has hugely impacted the landline telephone business of Verizon, with many people swapping out their traditional home telephones for a mobile cellular device.

It's also doing a number on the finances of some towns. Because of a state statute, if the number of landline phone customers in a municipality drops below 51 percent of landline customers, Verizon NJ no longer has to pay what's known as a "personal property" tax.

Because most Woodbridge Verizon customers have kept their traditional telephone service, the company is still required to pay that tax.

In 2010, it amounted to almost $400,000 for Woodbridge, said Verizon spokesman Lee Gierczynski. But in , where the percentage of landline customers dropped below the 51 percent benchmark, the loss to the municipality's coffers is substantial.

Verizon notified Moorestown that they were no longer required to pay the personal property tax because of the drop in landline phone customers. That will cost Moorestown approximately $40,000 in personal property tax revenue.

Hopewell Township has a case pending in state tax court since it lost the personal property tax revenue last year. 

The law affects 68 municipalities in New Jersey, a fraction of the 475 towns Verizon serves and where customers are hanging onto their landline service, Gierczynski said. 

The statute itself only affects Verizon and the few other companies in the state who engage in landline phone business. Cable and Internet service aren't included in the law.

"It's a unique law. Most businesses in New Jersey don't pay personal property tax," Gierczynski said. 

Dropping the personal property tax makes Verizon more competitive with cell phone providers who don't engage in landline service. 

"Verizon NJ has 50 percent fewer landline customers than we had a decade ago," Gierczynski said.

The personal property tax is revenue collected on the value of equipment, machinery, telephone poles, and other like items. It is not, Gierczynski said, the same as property tax paid on land and buildings owned by Verizon.

"They are two separate taxes," he said.

Verizon has two physical facilities in Woodbridge Township, for which the company paid $95,098.00 in property taxes in 2010. 

But since more than 51 percent of Woodbridge phone service customers have chosen to keep their traditional telephone service, Verizon is still required to remit a personal property tax to the township.

In 2010, that amounted to $398,861.00, Gierczynski said.