Further to our client alert from January, regarding the Court of Appeals’ decision in the T-Mobile case, it has come to our attention that the NYS Office of Real Property Tax Services (ORPTS) has begun to issue telecom ceiling determinations which include certain telecom assets (including fiber) that are now considered taxable real property as a result of that decision. ORPTS has also notified some telecom companies doing business in New York State that it now considers it mandatory to provide inventory reporting concerning both telecom assets located on public property and private property, and has sent some companies requests for inventory reports seeking details concerning their fiber, poles and conduits located on private property.
Since 2015, ORPTS has been administering a pilot program to establish telecom tax assessment ceilings for telecom assets that both qualify as real property and are located on private property. Unlike the special franchise assessment program, the telecom ceiling program does not directly set the tax assessments for telecom assets located on private property. Instead, the telecom ceiling program establishes a maximum assessed value, by municipality, for each owner’s telecom assets that qualify as real property within that municipality. The taxable assessed value for those assets is still set by the municipality’s assessor – but cannot exceed the ceiling established by ORPTS.
Now that fiber is considered taxable as real property, ORPTS is issuing telecom ceilings for companies that own fiber located on private property. In the past, such companies probably have not been completing inventories of such fiber for submission to ORPTS (because ORPTS regulations arguably required inventory reporting only for fiber located on public property as part of the special franchise assessment process). In the absence of inventory reporting for telecom assets located on private property, it is not clear what information ORPTS may be using to calculate the resulting telecom ceilings. ORPTS has indicated, however, that it believes its existing regulations require inventory reporting of taxable telecom assets located on private property, that a failure to submit inventory reports will constitute a waiver of the owner’s right to challenge the telecom ceiling established for such assets, and that the State may seek financial penalties if inventory reports are not timely filed for such assets.
This year’s deadline to submit the required inventory reports is April 30, 2019, with significant change inventory reports due on or before August 15, 2019. Financial reports, if required, are also due to be filed by April 30, 2019. Absent a challenge to ORPTS’ interpretation of its regulation, a failure to submit inventory reports in accordance with these deadlines may result in a waiver of the right to challenge ORPTS’ telecom ceiling for this year, as well as financial penalties that accrue each day after the deadline to file passes. The resulting effect on the tax bills you ultimately receive may be significant, particularly if ORPTS utilizes incorrect or incomplete inventory information to establish the telecom ceiling applicable to your assets.