New York considering tax changes that would affect independent power companies doing business there | Norton Rose Fulbright
New York taxes utilities differently than other companies. Corporations “formed for or principally engaged in business of supplying...gas..., or electricity” are subject to taxes on their gross receipts. There are two levels of gross receipts taxes: an additional percentage of tax applies to electricity suppliers that are subject to rate regulation by the New York Public Service Commission. Meanwhile, other companies not in the utility business pay net income taxes rather than tax on their gross receipts.
Governor Pataki asked the state legislature in January to repeal the gross receipts tax. Power companies would be subject to the same net income tax in future as other companies, with the exception that the additional percentage tax on gross receipts of utilities that are subject to rate regulation by the PSC would be phased out by gradually by reducing the tax rate between now and 2003.
Separately, power marketers have complained about a letter from the deputy commissioner of taxes in New York asserting that sales taxes must be paid on unbundled transmission or distribution charges for delivering electricity to a consumer. The governor proposed in his budget to let power marketers credit against net income taxes any sales taxes they pay on transmission or distribution services during the one-year transition period April 1, 1999 through March 31, 2000. Power marketers had hoped to avoid such sales taxes altogether by separately stating the transmission and distribution charges and contracting separately for such services.