Response July 12, 1995
Request
April 27, 1995
Utah State Tax Commission
210 North 1950 West
Salt Lake City, UT 84134
Re: Non-Applicability of Gross
Receipts Tax To XXXXX and its Members
Dear Commissioners:
During the 1995 General Session, the Utah legislature enacted S.B. 254
imposing a gross receipts tax on electrical corporations “subject to rate
regulation by the Public Service Commission of the state of Utah.” U.C.A. §59-8a-103(1)(a)(ii). As the Commission is aware, neither XXXXX
nor it member cooperatives are subject to “rate regulation” by the PSC.
Because XXXXX only sales of electricity are to its member cooperatives,
it is a “wholesales electrical cooperative’ specifically excluded from PSC rate
regulation by U.C.A. §54-4-1.1:
The [public service] commission does not have the authority under the
provisions of this title to regulate, fix, or otherwise approve or establish
the rates, fares, tolls or charges of a wholesale electrical cooperative.
XXXXX member cooperative distribute electricity to their members and
the public within their service areas “at cost” as determined by their
respective boards of directors.
Although the rates established by the boards to cover the cooperatives
costs of service are filed with the PSC as “tariffs,” the jurisdiction of the
PSC is limited to making “the tariffs available for public inspection.” U.C.A. §54-7-12(6)(d). Like XXXXX, the members cooperative have
historically been and continue to be excluded from any “rate regulation” by the
PSC.
This letter confirms our discussions with member of the Commission, the
PSC, and the sponsor of S.B. 254 during the general session regarding the
non-applicability of the new gross receipts tax to either XXXXX or its member
cooperatives. Because S.B. 254 was an
act relating to revenue and taxation, not an act to expand the jurisdiction of
the PSC, nothing in the act subjects either XXXXX or its member cooperatives to
rate regulation by the PSC or the new gross receipts tax.
Your confirmation or our interpretation of S.B. 254 through an advisory
letter opinion will be sincerely appreciated.
Very truly yours,
XXXXX
RE: Advisory opinion on whether electrical
cooperatives are subject to the newly enacted gross receipts tax
In
your XXXXX letter, you requested an advisory opinion as to whether electrical
cooperatives are subject to the the newly enacted gross receipts tax enacted by
the Utah State Legislature in 1995 (S.B. 254).
Our
research indicates as follows:
Based
upon Commission participation in various meetings where the gross receipts tax on
rate- regulated electrical utilities was discussed, it is the Commissioner’s
position that only investor- owned electrical utilities are subject to the
tax. Discussions with XXXXX of the
Public Service Commission also indicate that the PSC does not consider
electrical cooperatives to be “rate- regulated.”
Therefore
the Utah State Tax Commission concurs with the position outlines in your
XXXXX. The newly enacted gross receipts
tax will not apply to electrical cooperatives.
This
opinion is based upon the facts presented in your letter. Obviously, if there are deviations from
these facts, this opinion may be negated.
If
you do not agree with this determination, you may appeal to the Tax Commission
for a formal hearing. The results of
that hearing would constitute a declaratory judgement and be appealable to the
Utah State Supreme Court. A Notice of
Appeal Rights and a copy of the Utah Taxpayer Bill of Rights are attached.
Respectfully,
Roger
Tew, Commissioner
This letter is in response to your letter of XXXXX. You have requested an official Commission
position as to whether electrical cooperatives are subject to the newly enacted
gross receipts tax enacted by the Utah State Legislature in 1995 (S.B. 254).
Based upon Commission participation in various legislative meetings
where the gross receipts tax on rate-regulated electrical utilities was
discussed, it is the Commission’s position that only investor-owned electrical
utilities are subject to the tax.
Discussions with XXXXX of the Public Service Commission also indicated
that the PSC does not consider electrical cooperatives to be “rate-regulated.”
Therefore,
it is Utah State Tax Commission concurs with the position outlined in your
April 27, 1005 letter. The newly
enacted gross receipts will not apply to electrical cooperatives.