- 12 - fees. None of petitioner’s customers who paid pre-1987 utility rates and subsequently left petitioner’s service asserted claims against petitioner for repayment or refund of the excess deferred Federal income tax. Petitioner was not required to nor did it issue refund checks or billing credits to its customers, and the regulatory agencies also did not require petitioner to pay interest on amounts returned through rate reductions. Petitioner’s 1987, 1988, 1989, and 1990 Federal income tax returns used the method of accruing unbilled revenue, as set forth above, in calculating taxable income. Also for those years, petitioner claimed section 1341 relief for the amount in which it reduced utility rates to compensate for excess deferred Federal income tax. Respondent audited petitioner’s 1987, 1988, 1989, and 1990 Federal income tax returns. Upon review, respondent rejected petitioner’s method of accruing unbilled revenue (unbilled revenue issue) and denied petitioner’s claims for relief under section 1341 for rate reductions associated with excess deferred tax (section 1341 issue). OPINION Unbilled Revenue Issues The unbilled revenue issue is essentially an accounting dispute. Petitioner maintains that its regular method of accounting, which uses the PGA and EAC mechanisms to recover gas costs, already includes December gas costs in the taxable yearPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011