Connecticut laws/regulations;

OLR Research Report

January 12, 2001




By: Kevin E. McCarthy

You asked how the towers used to provide cellular telecommunications services are taxed.


The law does not specify whether cellular towers are personal or real property, but most assessors treat them as personal property. By law, personal property owned by some telecommunications companies is subject to state, rather than local, property tax assessment. Other telecommunications companies can elect this tax treatment. The distinction in whether state assessment is mandatory or voluntary depends on whether the company was subject to the former telecommunications gross receipts tax before 1990. These provisions do not affect property owned by entities other than telecommunications companies, for example firms that build towers and then rent out space on them to telecommunications companies, a practice that is becoming common.

Tax payments go directly to the municipalities, regardless of whether the state or the municipalities assess the towers. The amount of taxes a municipality receives for property assessed by the state is sometimes less and sometimes more than it would have received than if the property had been locally assessed. This reflects differences between state and local tax rates and depreciation rules.

Some assessors treat towers that are not eligible for state assessment as real property, a practice which appears to be consistent with the law. A law passed last session gives assessors in 11 municipalities the right to audit the tax filings of the companies that are subject to the state assessment.


CGS 12-80a requires the state, rather than municipalities, to assess personal property owned by companies that were subject to the telecommunications gross receipts tax before January 1, 1990 and the sales tax thereafter. Each company must submit a list specifying the location of its personal property by town to Office of Policy and Management (OPM) and the Department of Revenue Services. Separate tax provisions apply to property used to provide cable TV and telecommunications services. (Some types of personal property, such as fiber optic lines, can be used to provide both services simultaneously.)

The property on the list is assessed at 70% of its fully depreciated value (i.e. its net book value) rather than 70% of its fair market value, the normal basis for property tax. The property is taxed at a statewide rate of 47 mills rather than the locally set mill rate. There are significant procedural differences between the way the state assesses this property and the way municipalities assess personal property under CGS 12-63. The mandatory state assessment provisions affect companies that were in the Connecticut telecommunications market before 1990.

The law allows other telecommunications companies to choose to have their personal property subject to state rather than local assessment. To be eligible for this option, the company must have been subject to the sales tax on or after January 1, 1990 and not have been subject to the gross receipts tax before this date. This provision affects companies that entered the Connecticut market after January 1, 1990. There are several hundred such firms, although few of them have towers in the state.

According to OPM, seven telecommunications companies currently pay property tax under CGS 12-80a: Southern New England Telephone, New York Telephone, Woodbury Telephone, AT&T, Sprint Spectrum, Sprint PCS, and Level3 Communications. During the first few years that a tower owned by these companies is in operation, the municipality receives higher tax payments under the state tax assessment than it would have under the local one. This is because the 47-mill statutory tax rate is substantially higher than the rate imposed by most towns.

However, this advantage erodes over time due to OPM's depreciation rule, which assumes that the towers have no value after 15 years, and thus stop generating tax revenue for the municipalities. In contrast, most municipalities impute a “residual value” to comparable towers that are subject to local assessment. The Connecticut Conference of Municipalities has asserted that municipalities lose millions of dollars of tax revenue per year, in aggregate, because of the state method. Municipalities with higher tax rates are more likely to lose revenue under the statutes method than those with lower tax rates.

PA 00-186 allows the assessors of 11 municipalities (Bridgeport, Cheshire, Fairfield, Hartford, Mansfield, Meriden, New Haven, New London, Southbury, Stamford, and Windsor) to audit the personal property of the companies subject to CGS 12-80a. The municipalities must notify the affected companies of any problems with their returns. The companies must file an amended return if there are problems, or challenge the assessor's findings. The assessors must report their findings to the Finance, Revenue and Bonding Committee by January 1, 2001.


The law does not specify whether cellular towers are personal or real property. Most assessors treat them as personal property according to OPM staff. However, some assessors, primarily in Fairfield and New Haven counties, treat the towers owned by companies other than the seven covered by the state tax assessment as real property. None have sought to treat the towers owned by the seven companies as real property, according to OPM staff.

It appears that treating towers as real property is consistent with the law. CGS 12-64a, which defines real property for tax purposes, includes all structures, although it does not specifically mention towers. Similarly, Conn. Agencies Regs. 16-50j-2a defines a tower as a structure for purposes of establishing the Connecticut Siting Council's jurisdiction.