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Welch: Tax Loophole Saved Verizon Millions

Burlington, Vermont - October 25, 2009

Congressman Peter Welch (D-Vt) is working to close a tax loophole that allowed Verizon to avoid $300 million dollars in taxes when it sold it's landline service to FairPoint.

Welch says Verizon took advantage of a provision called the Reverse Morris Trust. He said the tax savings made the deal with FairPoint economically viable at a time when market forces were not ripe for a spin-off. Welch says it was a good deal for Verizon but not for phone customers in northern New England. "So here you have a situation where the taxpayers are on the hook for this deal for about $300 million dollars. And it's a deal that looks like it's going to fail. I mean the Fairpoint deal is collapsing before our very eyes. So why is it that the taxpayers take the risk rather than Verizon or Fairpoint," Welch said.

Welch says Verizon is looking to spin-off other companies in other parts of the country. He wants to close the tax loophole before that happens.