Louisiana Legislative Auditor
Daryl G. Purpera, CPA, CFE

May 1, 2017

Tax Credit Could Be Cut or Ended If Wireless Providers, Landline Phone Companies Taxed the Same

If Louisiana were to tax wireless service providers and landline telephone companies the same way, it could reduce or eliminate the Telephone Company Ad Valorem Tax Credit, the Legislative Auditor said in a report released today. Auditors who examined the tax credit found that it cost the state approximately $57.5 million between fiscal year 2014 and fiscal year 2016 and is projected to cost about $22.9 million in fiscal year 2017 and $23.4 million in fiscal 2018.

Currently, landline telephone companies are assessed at 25 percent of fair market value and taxed on their tangible and intangible assets because they are categorized as public service companies under state law. Wireless service providers, however, are not considered public service companies. They are assessed at 15 percent for their tangible property, such as antenna towers or machinery and equipment, but are not taxed on their intangible assets.

At the same time, the Telephone Company Ad Valorem Tax Credit allows landline telephone companies to receive a credit equal to 40 percent of their property taxes. The net result is that landline telephone companies pay as much as they would if their assessment level was 15 percent instead of 25 percent, and the state makes up the difference.

Auditors identified some options that would result in wireless providers and landline companies being taxed the same way. For example, officials could assess both wireless and landline companies as public service companies but at the 15 percent level. This would expand the property base on which wireless service providers are taxed to include their intangible assets, while the lower rate would maintain revenue neutrality. The increase in revenue from the inclusion of wireless providers’ intangible assets in their tax base would offset the revenue lost from the lower assessment level on landline telephone companies.

Wireless service providers are not assessed as public service companies because state law defines public service companies as telegraph and landline telephone businesses. Firms that provide cellular service, paging service, or other forms of mobile or portable communications service are excluded under a clause that was added in 1992 when wireless communication was less prevalent.

For more information contact:

Legislative Auditor
225.339.3800



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Office of the Louisiana Legislative Auditor | www.LLA.La.gov