THE TAX TREATMENT OF ELECTRIC INTERTIES will be settled by late November, officials at the US Treasury Department said
THE TAX TREATMENT OF ELECTRIC INTERTIES will be settled by late November, officials at the US Treasury Department said. However, the World Trade Center disaster could delay things. At issue is whether utilities must report interconnection payments they receive from independent generators as income.
Meanwhile, the Internal Revenue Service released a private letter ruling in September that said a utility did not have to report interconnection payments from the owner of a cogeneration facility. The main focus of the cogeneration facility was to supply power to the owner’s own factory. However, the owner planned to sell any excess power both under a long-term contract to the local utility and also to power marketers. The ruling is interesting because the logic the IRS used to explain why the utility did not have to report the interconnection payments in this case as income suggests that interconnection payments utilities receive from merchant power plants also should not be reported as income.
A private ruling can only be relied on by the taxpayer who received it. The announcement later this year is expected to take the form of a “notice” on which all taxpayers can rely.