Close the loophole, protect your service

Right now we've got a great chance to close the corporate tax loophole that lets phone and Internet companies bank hundreds of millions in tax savings by putting your service at risk.

U.S. Representative Paul Hodes (D-NH) has announced he will introduce legislation that would reform the Reverse Morris Trust (RMT), an obscure loophole that lets companies like Verizon avoid hundreds of millions in taxes by dumping their assets on smaller, weaker companies.

This legislation is crucial to protect consumers like you. If the RMT loophole remains open, then Verizon and other companies could expand their efforts to dump their landlines -- jeopardizing phone and Internet service across the country.

Help close the RMT loophole and stop this from happening -- send a letter urging your member of Congress to co-sponsor Rep. Hodes' legislation.

Subject:

Dear [ Decision Maker ],

(Edit Letter Below)

I'm writing today to urge you to co-sponsor Rep. Hodes' legislation to reform the Reverse Morris Trust (RMT). This obscure corporate tax loophole is subsidizing phone and Internet service downgrades and job losses around the country, and it must be closed as soon as possible.

Companies like Verizon have exploited the RMT loophole to sell their landlines to smaller firms, pocketing hundreds of millions in tax savings while the new owners of the phone and Internet lines struggle to stay afloat. That puts their customers' service at risk -- and it could cost many telecom workers their pay, their benefits, or even their jobs.

To qualify for an RMT, the selling company's shareholders must own a majority of the new company. In order to do this, the acquiring company must be much smaller than the properties to be acquired. As a result, the RMT has the perverse effect of encouraging companies to seek small, otherwise unqualified buyers, simply to avoid taxes. Typically, the purchasing company is loaded up with debt and lacks the capital to maintain and invest in the business.

Verizon and other companies shouldn't be able to risk their customers' service and their workers' jobs at the taxpayers' expense -- but that's exactly what the Reverse Morris Trust allows. Right now, for example, Verizon is attempting to sell almost 5 million landlines in 14 states to a Frontier Communications. The deal would net Verizon $ 600 million in tax savings -- depriving the government of much-needed revenue -- while leaving its customers' phone and internet service in the hands of a small, debt-saddled company.

This isn't just conjecture. Two years ago, Verizon engaged in a similar tax avoidance scheme in its sale of landlines to FairPoint Communications in Vermont, New Hampshire, and Maine. FairPoint is now in bankruptcy, putting customers and workers' jobs at risk -- while Verizon walked off with $300 million in tax savings.

If the RMT loophole isn't closed, this could be just the beginning. Similar deals could happen in many more states, hurting consumers and workers all across the country. I hope you won't let that happen. As my representative, I strongly urge you to co-sponsor Rep Hodes' legislation to reform the Reverse Morris Trust. Our tax code shouldn't encourage and reward companies for hurting their consumers and employees.

Thank you.

Sincerely,
[Your name]
[Your address]

Take Action on this Issue

Send this message to:

Your Congressperson

Welcome back!

mark raines already participated in this campaign on 01/07/2010.

Click here to take action as another user.