- 15 - 1986 pursuant to TRA. The taxpayer was forced by regulatory law to reduce its rates in subsequent years to offset the excess deferred Federal income tax. A deductible expense is required by section 1341(a)(2) to qualify for relief under the statute. This Court held that the taxpayer’s method of decreasing its deferred Federal income tax account resembled a reduction in rates rather than a deductible expense. Factors that led to this Court’s conclusion were: First, the taxpayer had returned excess deferred income tax to customer classes based upon current energy consumption, not upon amounts each individual customer actually overpaid during the years of overcollection; second, no interest component was included with the refunds; and, third, the taxpayer set off the amount to be refunded against future amounts owed for goods and services on customers’ bills, rather than actually returning money to customers. This Court decided that the taxpayer “was not repaying its customers the excess deferred Federal income tax that it collected in prior years. Rather, the rate reductions served only to reduce income in future years and did not directly compensate * * * [the taxpayer’s] customers for prior overcollection.” Id. at ___ (slip op. at 26). Because these same factors are present in the case at hand, we conclude that Florida Power’s return of excess deferred Federal income tax resembles a reduction in rates rather than a deductible expense.Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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