Looking at a Duquesne Light bill for a client in Pittsburgh and there are 5 separate tax-related line items: state sales tax, gross receipts tax, utility realty tax, nuclear decommissioning surcharge, and a public utility commission assessment. Some of these look like taxes and some look like regulatory surcharges. Which of these can potentially be reduced or exempted for a qualifying customer?
Multiple tax lines on the bill — which ones are actually disputable?
In Pennsylvania the sales tax and gross receipts tax are the two you can work with. Manufacturing exemptions eliminate the sales tax and can reduce the GRT calculation as I mentioned in another thread. The utility realty tax, nuclear decommissioning, and PUC assessment are regulatory pass-throughs that apply to all customers regardless of exemption status. They're not sales taxes — they're cost recovery mechanisms authorized by the PUC. You can't exempt from those but you can verify they're being calculated correctly based on your usage.
Connecticut is similar — Eversource bills have the state sales tax, a gross earnings tax, a systems benefits charge, a federally mandated congestion charge, and a few others. The sales tax is exemptable for manufacturers and nonprofits. The gross earnings tax is a utility-specific tax that can sometimes be reduced if the base charges it applies to are corrected. The others are regulatory. I always tell clients: not every line item is fixable, but every line item should be verified.
Walt asks a question every auditor should investigate for their working states. The general rule: sales taxes and use taxes are exemptable for qualifying entities. Gross receipts taxes and utility-specific taxes may be reducible if the base calculation is wrong. Regulatory surcharges, system benefit charges, and PUC assessments are generally fixed pass-throughs that cannot be exempted but should still be verified for correct calculation. Build a reference sheet for each state listing every tax and surcharge line item, whether it's exemptable, and what form is required.
Built the reference sheet for Pennsylvania. Turns out the gross receipts tax on my client's bill was being calculated on a charge that should have been excluded. Small error — about $22/month — but it had been running for years. The sales tax exemption for manufacturing was the big win though. Combined findings on tax items alone were about $6,800/year.