DEPARTMENT OF STATE REVENUE
SUBJECT: Utility Receipts Tax
This directive has been changed from the previous version to reflect that a political subdivision for sewer and sewage service is exempt from the utility receipts tax. This change reflects an amendment in the law that was effective beginning in 2003 but that was not incorporated in this directive previously.
"Gross receipts" refers to anything of value, including cash or other tangible or intangible property, that a taxpayer receives in consideration for the retail sale of utility services for consumption before deducting any costs incurred in providing the utility services.
• Electrical energy;
• Natural gas used for heat, light, cooling, or power;
• Sewage; or
• Telecommunication services.
The utility receipts tax is imposed upon the receipt of the entire taxable gross receipts of a taxpayer who is a resident or domiciliary of Indiana and the taxable gross receipts derived from activities or businesses or any other sources within Indiana by a taxpayer who is not a resident or domiciliary of Indiana.
The following receipts are subject to the utility receipts tax:
• The retail sale of utility services for consumption;
• Judgments or settlements as compensation for lost retail sales;
• Sales to a reseller if the utility is used in hotels, mobile home parks, or marinas;
• Sales of water or gas to another for rebottling;
• Installation, maintenance, repair, equipment, or leasing services provided to a commercial or domestic consumer that are directly related to the delivery of utility services and charges for removal of the equipment from such consumer upon termination of service.; and
• All other receipts not segregated between retail and nonretail transactions.
The following deductions are permitted against the taxable receipts for purposes of the utility receipts tax:
• Each taxable year a taxpayer is entitled to deduct from the taxpayer's gross receipts an amount equal to $1,000. This amount is prorated if the taxpayer's tax period is less than one year. NOTE: An affiliated group that files a consolidated return is entitled to only one deduction.
• If a taxpayer reports the taxpayer's gross receipts on an accrual basis, the taxpayer is entitled to deduct bad debts from the taxpayer's gross receipts in the same manner provided in
• If, for federal income tax purposes, a taxpayer is allowed a depreciation deduction for a particular taxable year with respect to a resource recovery system and the resource recovery system processes solid waste or hazardous waste, the taxpayer is entitled to a deduction equal to the depreciation deduction for an Indiana resource recovery system that the taxpayer is allowed under Sections 167 and 179 of the Internal Revenue Code, unless the taxpayer is convicted of any criminal violation under
• The taxpayer is entitled to deduct from gross receipts the amount paid by the taxpayer for the return of an empty container of the type customarily returned by the buyer of the contents for reuse as a container if the taxpayer included such deposits in its gross receipts.
• The taxpayer is entitled to a deduction for gross receipts exempt from taxation under
IC 6-8.1-15 and the Mobile Telecommunications Sourcing Act.
The following receipts are excluded from the computation of the utility receipts tax:
• Sales to the U.S. government to the extent prohibited by the U.S. Constitution;
• Collections by a taxpayer of a tax, fee, or surcharge imposed by a state, a political subdivision, or the United States if the tax is imposed solely on the sales at retail of utility services and the taxpayer collects the tax separately as an addition to the price of the utility service sold;
• Wholesale sales to another generator or reseller of utilities;
• Sales of natural gas to a purchaser that consumes the natural gas in the direct production of electricity to be sold by the purchaser;
• Holding company receipts from member electric cooperatives;
• Joint agency receipts from member municipal electric utilities;
• Refundable deposits paid by a customer to the taxpayer;
• An occasional sale of utility services by a taxpayer that is not regularly engaged in the trade or business of selling utility services;
• Gross receipts derived from the sale of utility services between members of a controlled group of corporations or an affiliated group, if the seller is the producer of the utility service and the purchaser is the end user, and the seller and purchaser exist at the same location; and
• Gross receipts received by a taxpayer from an electricity supplier as payment of severance damages or other compensation resulting from a change in assigned service area boundaries.
Gross receipts received by the following entities are exempt from the utility receipts tax:
• A nonprofit corporation formed solely for the purpose of supplying water to the public. This does not include a municipal water company operated by a municipality or political subdivision;
• A nonprofit corporation formed for the purpose of providing a combination of water and sewer and sewage service to the public;
• A county onsite waste management district established under
IC 36-11; or
• A political subdivision for sewer and sewage service.
Every taxpayer whose annual utility receipts tax liability exceeds $2,500 is required to file and pay the utility receipts tax on a quarterly basis. The taxpayer shall pay to the department 25% of the annual estimated tax or the exact amount of utility receipts tax that is due for that quarter.
Indiana Department of Revenue
Every taxpayer who receives more than $1,000 in receipts from the retail sale of utility services is required to file an annual utility receipts tax return, Form URT. Any taxpayer who does not file an annual utility receipts tax return for a taxable year may be required to execute and file with the department a sworn statement that the taxpayer did not receive more than $1,000 of taxable gross receipts during the taxable year.
Corporations are considered to be affiliated if at least 80% of the voting stock of one corporation is owned by the other corporation. Every corporation affiliated with another corporation is affiliated with every corporation that is affiliated with such other corporation. All corporations so affiliated constitute an affiliated group.
Michael J. Alley