Montana Supreme Court ruling to increase cable company's property taxes

2013-12-02T19:45:00Z 2014-05-27T19:24:35Z Montana Supreme Court ruling to increase cable company's property taxes

HELENA – The Montana Supreme Court on Monday ruled in favor of the state Revenue Department in a dispute that will increase Bresnan Communications’ property taxes by millions of dollars.

In a 5-2 decision, the Supreme Court overturned District Judge Susan Watters’ 2012 ruling in favor of Bresnan, which is now owned by Charter Communications.

The Supreme Court sent the case back to Watters and directed her to issue a ruling “consistent with this opinion.”

The court ruling will raise Bresnan’s annual property tax bill by 329 percent, from $1.7 million to $7.3 million.

The court’s majority concluded that the Revenue Department had legally and correctly reclassified Bresnan’s properties and lumped them together in a single property tax classification.

At issue was whether Bresnan and its properties – used to provide cable television, Internet and telephone services in Montana – should be combined in a single property tax classification as the Revenue Department had done or be split among two classifications as had been the case.

The department had argued all of Bresnan’s properties belonged in class 13 as a telecommunications service company for property tax purposes with a tax rate of 6 percent.

The company historically had divided its property between different property tax classifications – cable television systems in class 8 with a 3 percent tax rate and telecommunication services in class 13 with a 6 percent tax rate.


Writing for the court’s majority, Justice Brian Morris, found that the Revenue Department had properly reclassified Bresnan’s property.

“An analysis of the use and productivity of Bresnan’s entire network results in the inescapable conclusion that Bresnan uses a single transmission line to deliver three separate services,” Morris wrote. “This analysis imparts the department with the authority to classify Bresnan’s property accordingly under Class 13 as a telecommunications service.”

The court also reversed Judge Watters and concluded that all of Bresnan’s properties should be centrally assessed by the state. Previously some property had been assessed locally.

“Bresnan operates a single and continuous network in the 20 Montana counties where Bresnan delivers three services,” Morris said. “Bresnan operates in an integrated fashion. Bresnan’s customers pay one bill for the purchase of all three services. Bresnan manages its operations from the Network Operations Center in Billings.

“Customers use a single piece of terminal equipment. Bresnan owns Class 13 property in those locations where Bresnan operates a single transmission line to deliver three services to customers. Bresnan fits the statutory definition of a property that the department must assess centrally.”

Joining Morris in the court’s majority were Chief Justice Mike McGrath and Justices Patricia Cotter, Michael Wheat and Beth Baker.

Justice Jim Rice dissented, blasting the Revenue Department’s action to reclassify Bresnan’s property as “highway robbery – perhaps the first case of information superhighway robbery by the tax authorities.”

Justice Laurie McKinnon joined Rice in his dissent.


A Charter Communications spokeswoman said Bresnan, a longtime Montana taxpayer, “is extremely disappointed with the Montana Supreme Court’s decision.”

“Taxes to the state have always been fairly paid by Bresnan,” Charter spokeswoman Anita Lamont said. “This determination to retroactively raise Bresnan’s taxes more than 300 percent creates an alarming precedent.”

State Revenue Director Mike Kadas said the department is pleased with the ruling.

“Over the years, the company’s business has evolved from a one-way cable TV operation to a telecommunications services company, offering voice, video and Internet,” Kadas said. “Under Montana law, this change in Bresnan’s business operations requires the department to reclassify Bresnan’s property as that owned by a telecommunications services provider.”

He said the reclassification fulfills the department’s responsibility to equalize taxes among taxpayers by treating companies providing comparable telecommunications services in an equal manner.

Bresnan owned the company from 2002 to 2010, when Cablevision Systems Corp. bought it and rebranded it as Optimum West a year later. Charter bought the company in February 2013.

Chuck Johnson is chief of the Lee Newspapers State Bureau in Helena. He can be reached by email at: or by phone at (406) 447-4066 or (800) 525-4920.

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