Payment in Lieu of Taxes …PILOT

Payment in Lieu of Taxes …PILOT

There has been much discussion on the blog about following the DOR recommendation and formalizing the PILOT paid by the Light department. Bev has unearthed some interesting information about Chapter 164A ( New England Power Pool) in addition to Chapter 164 (Manufacture and Sale of Gas and Electricity)

Section 8 of Chapter 164A specifically in subsection C:

From Chapter 164A section 8

(c) There is hereby imposed on each municipal electric department an annual payment in lieu of taxes equal to the then equalization percentage of (A) the original cost less depreciation of its direct ownership interest in electric power facilities located within the commonwealth,

excluding any portion thereof represented by any investment by others as described in (B), and (B) in the event a municipal electric department has an interest other than direct ownership described in (A), the amount of its investment less any amortization thereof through ownership of securities, prepayment or similar arrangements in such facilities under this chapter, all as at the end of the municipal electric department’s last fiscal year. The equalization percentage shall be determined by the commissioner of corporations and taxation on or prior to July first of each year and shall be the percentage resulting from the fraction, the numerator of which shall be the aggregate amount paid in the preceding calendar year by all domestic electric utilities which are not municipal electric departments for franchise taxes paid to the commonwealth, plus any other taxes not covered by subsections (b) or (d) of this section paid to the commonwealth or any subdivision thereof and the denominator of which shall consist of the aggregate amount of net utility plant, as of the end of the preceding calendar year, of all domestic electric utilities which are not municipal electric departments; the amount of said taxes and net utility plant to be obtained by the commissioner from the annual reports for said preceding calendar year filed with the department of telecommunications and energy by said domestic electric utilities. If such taxes are reported for a period other than the calendar year, or if such net utility plant is reported as of a date other than the end of a calendar year, the commissioner shall use such period or date as is reasonable and practicable with such adjustments as may be necessary to carry out the purposes of this section. In the event a municipal electric department uses a fiscal year longer or shorter than twelve months, the commissioner shall appropriately adjust the payment to be made under this section. Such payment is to be in lieu of a tax upon the franchise of the municipal electric department to own or operate directly or indirectly such electric power facilities and is to be in accordance with the following provisions:

(1) Every municipal electric department subject to this section shall annually, on or before the fifteenth day of the third month following the close of its fiscal year, make a return to the commissioner of corporations and taxation sworn to by its manager, a majority of its commissioners, or in their absence or incapacity by any other principal officer, in such form as said commissioner with the approval of the state tax commission shall prescribe, stating such information as said commissioner may require for the determination of the payment imposed by this subsection. Said payment shall be due and payable on or before the due date of the return.

(2) All provisions of chapter sixty-three relative to the assessment, collection, payment, abatement, verification and administration of taxes, including penalties, applicable to domestic business corporations, as defined in section thirty of chapter sixty-three, shall, so far as pertinent, be applicable to payments under this subsection.

(3) All revenue collected under the provisions of this section shall be credited to the General Fund.

(d) In connection with all sales, use, excise and other taxes imposed with respect to electric power facilities, materials included or to be included therein, or energy produced thereat and sold at wholesale therefrom under authority of this chapter, by any laws of the commonwealth and not covered by subsections (b) and (c), a municipal electric department participating in an electric power facility by ownership, prepayment or contract for purchase of capacity and related energy from a specifically identified generating unit shall be subject to payments in lieu of such taxes in the same manner and under the same procedures as a corporation defined as an “electric company” in section one of chapter one hundred sixty-four is subject to such taxes and shall be limited to only those exemptions as are available to such a corporation.

(e) Legislative consent is hereby given to the application of the laws of other states with respect to taxation, payments in lieu of taxes, and the assessment thereof to any domestic electric utility which has acquired or has an interest in an electric power facility, real or personal, situated without the commonwealth, or which is owning or operating electric power facilities without the commonwealth pursuant to authority granted in this chapter.

What was that? There is a MGL with the PILOT payment calculation already in effect? Probably should look for this “commissioner of corporations and taxation” individual….maybe get some guidance. Oh yeah, we’re going to need the accurate financial data from the correct fiscal year in order to CALCULATE a PILOT payment. I see some math equations in our future. Maybe the DESE can add this type of question to the 10^th grade MCAS exam.

Good work Bev! Now we need to locate this “commissioner of corporations and taxation”. Maybe the BOS can ask the State Auditor’s Division of Local Mandates for some help in this matter. Can the town look at prior years? Very interesting!

My opinions…supported by FACTS ! ! !

Julie Farrell