PRESS ADVISORY: Risky Verizon-Frontier Merger Hinges on Tax Break: Customers, Taxpayers Stand to Los

[Omaha Steve]

Email: COMMUNICATIONS WORKERS OF AMERICA

FOR IMMEDIATE RELEASE CONTACT: David Roscow
January 5, 2010 703-276-2772 x21

Risky Verizon-Frontier Merger Hinges on Tax Break: Customers, Taxpayers Stand to Lose in Deal

Verizon to Avoid $600 Million in Taxes,
Proposed Legislation To Close Unfair Tax Loophole

Conference Call-in Press Briefing, 2:30 pm ET, Thursday, Jan. 7
Dial-in number for the call is [phone] (no access code needed)

WASHINGTON – Customers and taxpayers get a bad deal under Verizon’s proposed sale to Frontier Communications of 4.8 million rural landlines in 14 states. Verizon would avoid paying $600 million in taxes under the Reverse Morris Trust, an unfair tax loophole, while limiting quality phone and broadband service to rural areas.

To qualify for a Reverse Morris Trust (RMT) and avoid paying taxes on any gains from a sale, a selling company’s shareholders must own a majority of the post-merger acquiring firm. As is the case with the Verizon-Frontier sale, the acquiring company must be much smaller than the properties to be acquired. Frontier is taking on $3.3 billion in debt under this proposed deal.

Verizon engineered a similar “shell game” in its 2007 sale of rural landlines to FairPoint Communications in New England. Verizon avoided $300 million in taxes while FairPoint assumed massive debt and is now in bankruptcy. Consumers in New England now suffer from deteriorating service, delayed broadband build-out, and workers are fighting to protect their collectively bargained contract and jobs.

Legislation to be introduced by Rep. Paul Hodes (D-NH) will close the RMT tax loophole to prevent companies from engaging in tax avoidance schemes that harm communities, consumers, and workers.

A telephone news briefing will be held at 1:00 pm EDT on Thursday, January 7, 2010 to discuss the Verizon-Frontier deal and Congressional efforts to eliminate the RMT tax loophole.

Participants include:
* U.S. Rep. Paul Hodes, (D-NH)
* U.S. Rep. Alan Mollohan, (D-WVA)
* Larry Cohen, President, Communications Workers of America (CWA)
* Edwin Hill, President, International Brotherhood of Electrical Workers (IBEW)
* Ben Scott, Free Press

To participate, dial [phone] (no access code needed).

More information about the Verizon-Frontier deal can be found at http://www.verizonfrontierdeal.org/rmt

[zbdent]

1. "Verizon's got a charge for that!"

um, wouldn't that mean that their "red map" is gonna look a bit more like the "blue" (m)app?