Many take telephone services for granted. They’re in homes and businesses. At one time, they were nestled in nooks at restaurants and shopping malls or tucked into free-standing booths outdoors. Today, almost every U.S. home has at least one phone, whether a land line or a mobile device.
However, most don’t consider what goes on behind the scenes at a phone company. Fifty years ago, this included individual and party lines through land-line services. Today, phone companies have expanded to encompass data services, cable services, networking services, mobile phone calls, text messaging services and sales of equipment such as mobile devices.
It’s due to these changes that Farmers Telephone Cooperative (FTC) has filed a tax appeal with the Department of Revenue.
In the early part of the 20th century, telephone companies were given a tax exempt status when entering a rural area to help offset the high cost of installing telephone lines. This encouraged the phone companies to provide services to areas which might otherwise be passed over.
According to Clarendon County Administrator David Epperson, these laws were updated in the 1950s and again in 1973, and the laws are still in the South Carolina codes of law. In 2010, FTC filed an appeal with the Department of Revenue, asking that their newer services, such as mobile services, data services and cable services, be covered under this exemption law as well.
Clarendon County was apprised of the situation in late June 2017, when they, along with five other counties, received notices that FTC was awarded this appeal. Clarendon joined with Lee, Sumter, Williamsburg, Florence and Georgetown Counties to contest the decision. The counties jointly hired Parker Poe, Attorneys at Law from Greenville, to represent them.
“We’re challenging this settlement agreement FTC reached with the Department of Revenue, as it would exempt property going forward, which is obviously a loss of value and revenue for the county,” said Epperson. The counties assert the original law intended to exempt land line services only, and anything outside that scope should not be included in the exemption laws.
During the appeal process, FTC has paid roughly 80% of their expected taxes. Should FTC win the current litigation, the group of counties will be required to reimburse FTC for that paid tax amount back to the 2010 filing date.
“That’s coming up on nine years of taxes reaching almost a million dollars,” said Epperson. To date, this collective amount for all counties involved totals a bit over $11 Million.
Conversely, should the county collective win, FTC will be required to pay the counties the remaining tax money owed for those same years and will be required to continue tax payments into the future.
“For at least the last year, we’ve been gathering documentation and going through discovery with expert witnesses,” said Epperson.
At the January 2019 meeting of the Clarendon County Council, the Council was advised by attorney Walt Cartin from Parker Poe that the discovery phase of the legal action has been completed. The case will be heard in Columbia at the Administrative Law Court. Dates in May have been discussed for the hearing, although a firm date has not been selected at this time.
“Ultimately the taxpayers will be affected,” said Epperson. “And a lot of those taxpayers are also customers of Farmers Telephone.”
