YOUR TAXES : PART FIVE: PAYING YOUR TAXES : Developers shoulder new tax on utilities--for now
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A complex but telling change in the Tax Reform Act of 1986 affects developers and utilities: Builders have traditionally either extended gas mains and electric lines into their developments and turned them over to utilities without charge or paid them to do the work.
Until last Jan. 1, these “contributions in aid of construction” were not taxed. Now they are.
Southern California Gas, Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric have asked the state Public Utilities Commission to let them collect this new tax from the builders. But the PUC has yet to decide who should pay the tax--utility customers or builders.
Pending resolution of this question, the PUC adopted a temporary resolution last month authorizing the utilities to collect the tax from builders. But it warned the utilities that the collections will be subject to refund, with interest, depending on the findings of the commission’s investigation into the effects of the Tax Reform Act on utility rates and PUC policies.
“The action is not to be interpreted or relied on to predict what our final decision will be once our investigation into the tax act is completed,” the commission said.
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