Gross Receipts Tax
State governments are always on the lookout for dependable sources of revenue and Utility Gross Receipts Taxes are one of their favorites.
Like the name implies, gross receipts taxes (GRT) are a tax applied to a company's gross or total revenue. Unlike corporate income taxes that allow for the deduction of business expenses before the tax is applied, GRT are applied equally to every dollar a company receives from its customers.
Large and dependable revenue streams make utility companies a prime candidate for these taxes and most states have GRT in place that impact all or some of their state's utilities. Typical GRT rates are between 1-3% and in some states the tax revenue generated rivals that of sales and income taxes.
Historically, utilities have passed the cost of this tax on to customers through the general rates they charge. In recent years, many utilities have decided to show the Gross Receipts Tax as a separate line item on their bill. Individually listing the charge allows the utility to:
Lower their published rates
Draw visual attention to the impact the GRT has on customer bills
Seeing this tax listed as a line item often raises questions for local government and non-profit customers who enjoy tax exempt status and logically think they should be exempt from this tax. Technically however, customers do not pay this tax. The utility pays the GRT and customers "reimburse" the utility for the cost of that tax through the line item included on their monthly bill. All customers, regardless of tax status incur the cost associated with the GRT.
Still have questions? Call us at (813) 917-8952 and let us help with an answer.
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