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09/25/2020 10:31 AM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20190&cosponId=30357
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Senate of Pennsylvania
Session of 2019 - 2020 Regular Session

MEMORANDUM

Posted: September 19, 2019 10:39 AM
From: Senator Doug Mastriano
To: All Senate members
Subject: Clarification of Gross Receipts Tax Exemption for Municipal Electric Companies
 
In the near future, I intend to introduce the following legislation, and I invite you to join me as a co-sponsor:

Clarification of Gross Receipts Tax Exemption for Municipal Electric Companies.

The legislation will amend the Borough Code to state – unequivocally – that all electric energy supplied to borough electric systems for sale within borough limits is exempt from the imposition of Pennsylvania’s Gross Receipts Tax (GRT).

Under the state’s tax code, electric energy supplied to borough electric systems for resale within borough limits has long been recognized as exempt from this levy. This principle is enshrined in the Tax Code and is a position that the Dept. of Revenue has affirmatively acknowledged and heavily applied.

Indeed, boroughs that purchase wholesale power pursuant to long-term power purchase agreements have relied upon this exemption and have designed those power purchase agreements based upon the understanding that the GRT does not apply to the transaction.

Recently, however, the Dept. of Revenue has revised its position and is choosing to ignore the existing law.
The department is attempting to assess the GRT on wholesale suppliers that sell electric energy to borough electric systems for resale to borough customers – the department’s interpretation of the law and renewed efforts to assess the GRT in this manner are contrary to Pennsylvania law.

Borough electric systems, their ratepayers and borough taxpayers now face the prospect of carrying the substantial burden of paying for costs associated with the Dept. of Revenue assessing this tax.

My legislation will clarify any uncertainty that may exist, as the Borough Code will be amended to definitively state that the GRT exemption applies to the sale of electric energy to borough electric systems for resale.

Please consider co-sponsoring this important legislation. If you have any questions, please contact Scot Pitzer in my office at 717-787-4651.



Introduced as SB958