Opinion
DA 12-0569
12-02-2013
BRESNAN COMMUNICATIONS, LLC, Plaintiffs and Appellees, v. STATE OF MONTANA, DEPARTMENT OF REVENUE, Defendants and Appellants.
SYNOPSIS OF THE CASE
The Montana Supreme Court, in a 5-2 ruling, has upheld a determination by the Montana Department of Revenue that Bresnan Communications must pay property taxes as a telecommunications services company, resulting in a higher rate of taxation on Bresnan's Montana properties. Bresnan's taxes will immediately increase from $1.7 million to $7.3 million annually, or by 329%.
Bresnan Communications historically had divided its property between the tax assessment classifications for a "cable television system," and a "telecommunications services company." The Department of Revenue audited Bresnan's reporting in 2008 and concluded Bresnan's division of its property into three separate entities—voice, cable and internet—did not represent Bresnan's actual use of the property. The Department of Revenue classified all of Bresnan's property as a "telecommunication services company" upon completion of the audit, ruling that all of its property taxes should be centrally assessed, not just the roughly 10% that Bresnan has reported as two way communication services.
Bresnan challenged the classification and sought to prevent the Department of Revenue from issuing revised assessments. After trial, the District Court concluded that the Department of Revenue lacked authority to classify Bresnan's property entirely as a telecommunications services company because portions of it fit the definition of a oneway signal cable television system instead.
The Montana Supreme Court reversed. The Court determined that Bresnan's property fit within the statutory definition of a telecommunications services company because it is capable of delivering telephone, cable and internet service over the same equipment. The Court concluded that the Department of Revenue had authority to classify Bresnan as a telecommunications services company in most Montana locations, where Bresnan's property fits that statutory definition.
The two dissenting Justices contend that Bresnan should be taxed under separate property classes, depending on the specific use of the particular property, and not as a centrally assessed telecommunications company. The dissent cited from the extensive findings entered by the District Court documenting that 97% of Bresnan's bandwidth is used exclusively for one-way transmission of video programming for cable television.