- 20 -
obligation to make timely payments, the deposit ultimately was
refunded, and both the timing and method of refund were within
the control of the customer. The customer could demand that the
taxpayer return the deposit payment by check or by setoff on the
customer’s next utility bill.
The Court held that the test for whether deposit payments
paid by customers constitute income when received by the taxpayer
depends upon the rights and obligations of the parties at the
time the payments are made. See id. at 211. The Court decided
that, because it was within the customer’s domain to prevent a
forfeiture of a deposit payment and because the customer rather
than the taxpayer determined how and when a deposit payment was
returned, the payments in question did not constitute income to
the taxpayer. Where the time and manner of repayment is within
the control of the taxpayer, the payments would constitute
income. See Milenbach v. Commissioner, 106 T.C. 184, 197 (1996).
The return of overrecoveries of fuel and energy conservation
costs are not within the control of Florida Power. The 6-month
recovery period, price setting, and true-up adjustment are all
set by the FPSC and FERC, which implemented the pricing schemes
to reduce the volatility of customers’ bills. Florida Power is
required by regulatory law to overcollect for fuel and energy
conservation costs in certain months and to return those funds by
setoff on customers’ bills in the later months of the recovery
Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NextLast modified: May 25, 2011