Verizon must pay taxes on fees it collected to install landlines, Pennsylvania court says

The Pennsylvania Supreme Court ruled 3-2 that Verizon (NYSE: VZ) must pay taxes for fees from installing phone lines and providing directory assistance as well as performing a variety of repairs and services. However, the amount of those fees is unclear as the ruling didn't give a specific amount owed and didn't say whether the company is also responsible for any back payments.

According to the Daily Journal, the ruling stems from an 11-year-old dispute and reverses a previous decision that said Verizon could avoid paying taxes for certain nonrecurring charges related to repair and maintenance of phone lines.

The case is based upon a tax report Verizon filed in 2004 stating that it paid $74 million in gross receipts. The Department of Revenue adjusted that amount by $48 million before the department's board of appeals lowered that $48 million to just under $10 million.  

In 2013 the Commonwealth Court ruled against Verizon saying the company should pay those fees. But it said that Verizon did not owe Pennsylvania for moving and changing lines and services and repairs of phone lines. This latest ruling said that those costs are taxable and Verizon should pay the fees.

According to the Daily Journal, a Verizon spokesman declined to comment on the case.

However, the Pennsylvania Telephone Association, in a court filing from November 2013, warned that if the court ruled against Verizon it would result in great financial and operational issues for members of the PTA because they would likely also be responsible for similar fees.

This Supreme Court decision comes at a time when Verizon is already in hot water in Pennsylvania. The Communications Workers of America last month petitioned the Pennsylvania Utility Commission to investigate what it claims are unsafe conditions at a number of the telco's outside plant facilities.

For more:
- See this Daily Journal article
- See this Law360 article (sub. req.)

Related articles:
CWA asks Pennsylvania PUC to investigate Verizon's outside plant infrastructure
Verizon says CWA created a false impression of the state of its copper network


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