- 18 - furnished goods or services. But an advance payment does much more: it protects against the risk that the purchaser will back out of the deal before the seller performs. From the moment an advance payment is made, the seller is assured that, so long as it fulfills its contractual obligation, the money is its to keep. Here, in contrast, a customer submitting a deposit made no commitment to purchase a specified quantity of electricity, or indeed to purchase any electricity at all. IPL’s right to keep the money depends upon the customer’s purchase of electricity, and upon his later decision to have the deposit applied to future bills, not merely upon the utility’s adherence to its contractual duties. * * * * * * * * * * It is this element of choice that distinguishes an advance payment * * * The individual who makes an advance payment retains no right to insist upon the return of the funds; so long as the recipient fulfills the terms of the bargain, the money is its to keep. The customer who submits a deposit to the utility * * * retains the right to insist upon repayment in cash; he may choose to apply the money to the purchase of electricity, but he assumes no obligation to do so, and the utility therefore acquires no unfettered “dominion” over the money at the time of receipt. [Id. at 210- 212; fn. ref. omitted.] This Court, in applying the reasoning of Commissioner v. Indianapolis Power & Light Co., supra, has similarly emphasized the importance of which party controls the conditions under which repayment or refund of the disputed amounts will be made. See, e.g., Herbel v. Commissioner, 106 T.C. 392, 413-414 (1996), affd. 129 F.3d 788 (5th Cir. 1997); Highland Farms, Inc. v. Commissioner, 106 T.C. 237, 251-252 (1996); Kansas City S. Indus., Inc. v. Commissioner, 98 T.C. 242, 262 (1992); Michaelis Nursery, Inc. v. Commissioner, T.C. Memo. 1995-143. We havePage: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
Last modified: May 25, 2011