WATER UTILITIES are lobbying Congress for legislation to clarify that the utilities do not have to report customer connection fees as income.

This includes payments to extend water mains and sewage lines. Electric and gas utilities must report payments from customers — as opposed to suppliers — as income. However, the water utilities worked out a special deal with Congress in 1996 — they thought to exempt such customer payments — in exchange for agreeing to depreciate their assets over 25 rather than 20 years. The IRS has not administered the deal to their liking. Senator Charles Grassley (R.-Iowa) and Rep. Wally Herger (R.-Calif.) have introduced bills to address the issue. Both sit on the tax-writing committees.