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Revenue-neutral reconciliation - 66 Pa. Cons. Stat. § 2810Legal Research Home > Pennsylvania Statutes Sponsored Links
§ 2810. Revenue-neutral reconciliation.
(a) General intent of revenue-neutral reconciliation.--It is
the intention of the General Assembly that the restructuring of
the electric industry be accomplished in a manner that allows
Pennsylvania to enjoy the benefits of competition, promotes the
competitiveness of Pennsylvania's electric utilities and
maintains revenue neutrality to the Commonwealth. This section
is not intended to cause a shift in proportional tax obligations
among customer classes or individual electric distribution
companies. It is the intention of the General Assembly to
establish this revenue replacement at a level necessary to
recoup losses that may result from the restructuring of the
electric industry and the transition thereto.
(b) Imposition.--
(1) For tax periods beginning on or after January 1,
1999, a tax at the rate provided in subsection (c) is imposed
upon the gross receipts of electric distribution companies
and electric generation suppliers.
(2) A tax at the rate provided in subsection (c) is
imposed upon the gross receipts of any municipality owned or
operated public utility or of any public utility service
furnished by any municipality. Gross receipts shall be exempt
from the tax to the extent that gross receipts are derived
from sales of electric energy inside the limits of the
municipality owning or operating the public utility or
furnishing the public utility service.
(3) A tax at the rate provided in subsection (c) is
imposed upon the gross receipts derived from any electric
cooperative owned or operated public utility or from any
public utility service furnished by any electric cooperative.
Gross receipts shall be exempt from the tax to the extent
that gross receipts are derived from sales for resale or
sales of electric energy within the limits of its service
territory as set forth in 15 Pa.C.S. § 7406 (relating to
competition by electric cooperatives).
(c) Rate.--
(1) By December 1, 1998, and each October 1 thereafter
until and including October 1, 2002, the Secretary of Revenue
shall publish the rate of tax as provided in paragraph (2) in
the form of a notice in the Pennsylvania Bulletin and the
rate shall apply to the tax imposed by subsection (b) for the
period beginning the next January 1. The tax rate published
on October 1, 2002, shall continue in force without further
adjustment. If the commission determines under section
2806(c) (relating to implementation, pilot programs and
performance-based rates) to extend the transition period by
more than six months, the requirement for an annual
adjustment of the tax rate shall be extended by one
additional year. The secretary shall also certify the rate
calculated to the majority and minority chairs of the
Appropriations Committee of the Senate and the Appropriations
Committee of the House of Representatives and detail the
calculations of the rate.
(2) The secretary shall calculate the rate for the
periods beginning on and after January 1, 1999, in the manner
set forth in this paragraph:
(i) Multiply the 1995-1996 fiscal tax revenue base
by a fraction, the numerator of which is the total
kilowatt hours of electricity distributed for ultimate
consumption in Pennsylvania in the preceding calendar
year as certified by the commission and the denominator
of which is the total kilowatt hours of electricity
distributed for ultimate consumption in Pennsylvania in
the calendar year 1995 as certified by the commission.
(ii) From the product derived under subparagraph
(i), subtract the total cash payments made to the
department during the Commonwealth's preceding fiscal
year on account of affected taxes actually paid by each
electric distribution company and electric generation
supplier and by any other entity, including a successor,
whose affected taxes are contained in the 1995-1996
fiscal tax revenue base.
(iii) Divide the difference derived under
subparagraph (ii) by the total gross receipts in the
preceding calendar year as certified by the commission to
determine the tax rate. The tax rate under this
subparagraph shall be a decimal rounded to three places.
(3) On August 1, 2000, August 1, 2001, and August 1,
2002, the department shall deliver a report to the General
Assembly and the Governor that shall describe the dynamic
economic effect upon the affected taxes due to electric
utility restructuring. It is the purpose of this report to
provide the General Assembly and the Governor with
information to determine whether it is appropriate to
consider modifying the calculation described in paragraph (2)
to reflect additional tax revenues, if any, resulting from
the dynamic economic effects upon the affected taxes.
(4) If the effective rate for any affected tax is
different from the effective rate for such affected tax in
the 1995-1996 fiscal tax revenue base, an adjustment shall be
made to the computation of the rate of tax under paragraph
(2) by multiplying that portion of the 1995-1996 fiscal tax
revenue base attributable to the affected tax by a fraction,
the numerator of which is the effective rate of the affected
tax for the preceding fiscal year and the denominator of
which is the effective rate of tax of the affected tax in the
base fiscal year.
(5) For negative rates:
(i) If the rate of tax calculated for a tax year
prior to the tax year beginning January 1, 2004, or
January 1, 2005, in the event of an extension by more
than six months by the commission as provided in section
2806(c) is negative, a credit equal to the negative tax
rate for such tax year multiplied by the taxable gross
receipts for that tax year shall be allowed against the
taxpayer's liability for any tax for that tax year
imposed under Article XI of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971.
(ii) If the rate of tax calculated as the final
adjustment is negative for the tax period beginning
January 1, 2003, or January 1, 2004, in the event of an
extension by more than six months by the commission as
provided in section 2806(c), the rate of tax imposed by
section 1101(b) of the Tax Reform Code of 1971 for the
tax years beginning January 1, 2004, and thereafter, or
January 1, 2005, and thereafter, in the event of an
extension by more than six months, shall be adjusted and
set as follows: the tax rate expressed as a decimal
rounded to three positions shall be subtracted from .044
or the current rate imposed under section 1101(b) of the
Tax Reform Code of 1971 to determine the adjusted tax
rate. The adjusted tax rate shall be published in the
Pennsylvania Bulletin.
(6) Information to be provided to the department or the
commission shall be as follows:
(i) To ensure the identification of cash payments
for purposes of subsection (d), the commission shall
require any licensee, electric distribution company,
electric generation supplier or other person affected to
disclose on its license application, renewal or transfer
its State tax account or similar number relative to any
of the taxes specified.
(ii) The commission shall report and certify to the
secretary of the department by August 1, 1998, and each
August 1 thereafter the total amount of electricity
distributed for ultimate consumption in this Commonwealth
during the previous two calendar years and the total
gross receipts for the past year.
(iii) As a condition of licensure, the commission
shall require each electric distribution company and
electric generation supplier to report their annual gross
receipts in this Commonwealth.
(iv) For purposes of enforcing sections 2806 and
2809 (relating to requirements for electric generation
suppliers) as they relate to the payment of State taxes,
an applicant for the grant, renewal or transfer of a
license issued under this title shall, by filing an
application with the commission, waive confidentiality
with respect to State tax information regarding the
applicant in the possession of the department, regardless
of the source of the information, and shall consent to
the department providing that information to the
commission.
(7) (Repealed).
(d) Payment of tax and reports.--The tax imposed under
subsection (b) shall be paid within the time prescribed by law.
For the purpose of ascertaining the amount of the tax, the
treasurer or other appropriate officer of the taxpayer shall
transmit to the department by March 15 an annual report, and
under oath or affirmation, of the amount of gross receipts
received by the taxpayer during the prior calendar year. The
treasurer or other appropriate officer of the taxpayer liable to
report or pay taxes imposed under subsection (b), except
municipalities and cooperatives, shall transmit to the
department by March 15 a tentative report for the prior calendar
year. The tentative report shall set forth all of the following:
(i) The amount of gross receipts received in the
period of 12 months next preceding and reported in the
annual report.
(ii) The gross receipts received in the first three
months of the current calendar year.
(iii) Other information as the department may
require.
(e) Tax computation.--Upon the date its tentative report is
required to be made, the taxpayer making a tentative report
shall transmit the report to the department on account of the
tax due for the current calendar year and compute and make
payment of the tentative tax with the report under section 3003
of the Tax Reform Code of 1971.
(f) Time to file reports.--The time for filing annual
reports may be extended, estimated settlements may be made by
the department if reports are not filed, and the penalties for
failing to file reports and pay the taxes imposed under
subsection (b) shall be as prescribed by the laws defining the
powers and duties of the department. If the works of a taxpayer
are operated by another taxpayer, the taxes imposed under
subsection (b) shall be apportioned between the taxpayers in
accordance with the terms of their respective leases or
agreements. For the payment of the apportioned taxes, the
Commonwealth shall first look to the taxpayer operating the
works. Upon payment by that taxpayer, no other taxpayer shall be
held liable for any tax imposed under subsection (b).
(g) Timely mailing treated as timely filing and payment.--
Notwithstanding the provisions of any State tax law to the
contrary, whenever payment of all or any portion of a State tax
is required by law to be received by the department or other
agency of the Commonwealth by a day certain, the taxpayer shall
be deemed to have complied with that law if the letter
transmitting payment of the tax which has been received by the
department is postmarked by the United States Postal Service on
or prior to the final day on which the payment is to be
received.
(h) Procedure, enforcement and penalties.--Parts III, IV, VI
and VII of Article IV and Article XXX of the Tax Reform Code of
1971 shall apply to this section insofar as they are consistent
with this section and applicable to the tax imposed under
subsection (b). Notwithstanding the provisions of section 403(d)
of the Tax Reform Code of 1971, if the officers of any
corporation subject to tax under this chapter neglect or refuse
to make a report as required in this chapter or knowingly make a
false report, the department shall add to the tax determined to
be due a penalty of 5% of the amount of tax due for each month
or fraction of a month until the penalty has reached 25% and
thereafter a penalty of 1% of the amount of tax due for each
month or fraction of a month. Penalties added to the tax shall
not bear interest.
(i) Electric light, waterpower and hydroelectric
utilities.--The terms "electric light company," "waterpower
company" and "hydro-electric company," as used in section
1101(b) of the Tax Reform Code of 1971, shall be deemed to
include electric distribution companies and electric generation
suppliers.
(j) Sales of electric energy.--Retail sales of electric
generation, transmission, distribution or supply of electric
energy, dispatching services, customer services, competitive
transition charges, intangible transition charges and universal
service and energy conservation charges and such other retail
sales in this Commonwealth the receipts of which, if bundled,
would have been deemed to be sales of electric energy prior to
the effective date of this chapter shall be deemed sales of
electric energy for purposes of section 1101 of the Tax Reform
Code of 1971. The phrases "doing business in this Commonwealth"
and "engaged in electric light and power business, waterpower
business and hydro-electric business in this Commonwealth," as
such terms are used in section 1101(b) of the Tax Reform Code of
1971 and in this chapter, shall be construed to include the
direct or indirect engaging in, transacting or conducting of
activity in this Commonwealth for the purpose of establishing or
maintaining a market for the sales of electric energy and
include obtaining a license or certification from the commission
to supply electric energy. Retail sales of generation shall be
deemed to occur at the meter of the retail consumer.
(k) Electric cooperatives.--Section 1101(b) of the Tax
Reform Code of 1971 shall apply to electric cooperatives and
impose a tax upon the gross receipts derived from any electric
cooperative owned or operated public utility or from any public
utility service furnished by any electric cooperative. Gross
receipts shall be exempt from the tax to the extent that the
gross receipts are derived from sales for resale or sales of
electric energy within the limits of its service territory as
set forth in 15 Pa.C.S. § 7406.
(l) Provisions to be construed with utilities gross receipts
tax.--Subsections (i), (j) and (k) shall be construed in
conjunction with Article XI of the Tax Reform Code of 1971 and
shall be effective for tax years beginning January 1, 1997, and
thereafter.
(m) Indemnification.--The electric distribution utility
company's tariff shall provide that, if an electric distribution
company becomes liable under sections 2806(g) and 2809(c) for
State taxes not paid by an electric generation supplier, that
electric generation supplier shall indemnify the electric
distribution company for the amount of the liability so imposed
upon the electric distribution utility.
(n) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Affected taxes." The taxes imposed under Articles II, IV,
VI and XI and section 2301(f) of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971.
"Base fiscal year." The year beginning on July 1, 1995, and
ending on June 30, 1996.
"Department." The Department of Revenue of the Commonwealth.
"Effective rate." The tax rate applicable during the fiscal
year or, if more than one rate is applicable, the average of the
rates that were in effect for each month of the fiscal year.
"Fiscal year." A year beginning on July 1 and ending on the
subsequent June 30.
"Gross receipts." The gross receipts from the retail sales
of electric energy as defined in section 1101(b) of the Tax
Reform Code of 1971.
"1995-1996 fiscal tax revenue base." The receipts from
affected taxes from the fiscal year 1995-1996, such amount being
$984,141,837.
"Portion of the 1995-1996 fiscal tax revenue base
attributable to the affected tax." The following amounts for
the tax indicated:
Tax Amount
Corporate net income tax $181,628,433
Capital stock-franchise tax $117,495,605
Sales and use tax $187,401,632
Public utility realty tax $ 43,883,573
Utilities gross receipts tax $453,732,594
"Total utilities gross receipts." The total gross receipts
for a calendar year for all electric distribution companies and
electric generation suppliers which are derived from the sales
of electric energy and required to be reported to the commission
under subsection (c)(6)(iii).
(Dec. 23, 2003, P.L.250, No.46, eff. imd.)
2003 Repeal Note. Act 46 repealed subsec. (c)(7).
Cross References. Section 2810 is referred to in sections
102, 2804 of this title.
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Last modified: November 27, 2007 |