DISCLAIMER: Commissioner's Directives are intended to provide nontechnical assistance to the general public. Every attempt is made to provide information that is consistent with the appropriate statutes, rules and court decisions. Any information that is not consistent with the law, regulations or court decisions is not binding on either the Department or the taxpayer. Therefore the information provided herein should serve only as a foundation for further investigation and study of the current law and procedures related to the subject matter covered herein.

SUBJECT: Utility Receipts Tax

REFERENCE: IC 6-2.3

The purpose of this Directive is to present an overview of the Utility Receipts Tax which was effective January 1, 2003. This overview is intended to highlight the major areas of the law and promote a general understanding of the basic principles.

Gross Receipts. Gross receipts refers to anything of value, including cash or other tangible or intangible property, that a taxpayer receives in consideration for the retail sale of utility services for consumption before deducting any costs incurred in providing the utility services.

Receives. Receives as applied to a taxpayer means the actual coming into possession of, or the crediting to the taxpayer of gross receipts; or the payment of a taxpayer's expenses, debts, or other obligations by a third party for the taxpayer's direct benefit.

Taxable Gross Receipts. Taxable gross receipts means the remainder of all gross receipts that are not exempt from tax less all deductions that are allowed under the statute.

Taxable Year. Taxable year means the year that a taxpayer uses for purposes of filing the taxpayer's federal income tax return. If a taxpayer does not file a federal income tax return, then the term means a calendar year.

Taxpayer. Taxpayer includes the following:

regardless of whether the entity is exempt from adjusted gross income tax under IC 6-3 or exempt from federal income tax under the Internal Revenue Code.

Telecommunication Services. Telecommunication services means the transmission of messages or information by using wire, cable, fiber optics, laser, microwave, radio, satellite or similar facilities.

The term does not include value added services in which computer processing applications are used to act on the form of the information for purposes other than transmission.

The term does not include value added services providing text, video graphic or audio program content for a purpose other than transmission.

The term does not include the transmission of video programming or other programming provided by a television broadcast station or a radio station, including cable TV, direct broadcast satellite or digital television.

Utility Service. Utility service means the furnishing of any of the following:

The utility receipts tax is imposed upon the receipt of the entire taxable gross receipts of a taxpayer who is a resident or domiciliary of Indiana, and the taxable gross receipts derived from activities or business or any other sources within Indiana by a taxpayer that is not a resident or domiciliary of Indiana.

The tax is imposed at a rate of one and four-tenths percent (1.4%).

Every "S" Corporation or other entity exempt from federal income taxation under Section 1361 of the Internal Revenue Code, partnership, limited liability company and limited liability partnership is liable for the utility receipts tax. No utility receipts tax is imposed on a partner's, member's or shareholder's distributive share of the entity's gross income.

The following receipts are subject to the utility receipts tax:

NOTE: Generally, retail receipts from all utility services consumed within Indiana are subject to the utility receipts tax or the utility services use tax regardless of the point of generation or transmission across state lines. Receipts from the provision of mobile telecommunication services are subject to utility receipts tax to the extent that the receipts are sourced to Indiana pursuant to IC 6-8.1-15.

The following deductions are permitted against the taxable receipts for purposes of the utility receipts tax.

The following receipts are excluded from the computation of the utility receipts tax.

Gross receipts received by the following entities are exempt from the utility receipts tax.

Every taxpayer whose annual tax liability exceeds $2,500 is required to file and pay the utility receipts tax on a quarterly basis. The taxpayer shall pay to the Department 25% of the annual estimated tax or the exact amount of utility receipts tax that is due for that quarter.

A taxpayer who uses a taxable year that ends on December 31 shall file the taxpayer's estimated utility receipts tax return and pay the tax due on or before April 20, June 20, September 20, and December 20 of the taxable year. If a taxpayer's taxable year does not end on December 31, the due dates for filing the return and paying the tax are the 20^th day of the fourth, sixth, ninth, and twelfth month of the taxpayer's taxable year.

If a taxpayer's estimated quarterly utility receipts tax liability exceeds $5,000, the taxpayer shall pay the estimated utility receipts tax due by electronic funds transfer (EFT) or by delivering in person or by overnight courier a payment by cashier's check, certified check or money order to the Department. The transfer or payment shall be made on or before the date that the tax is due. If the taxpayer's utility receipts tax payment is made by electronic funds transfer (EFT), the taxpayer is not required to file an estimated utility receipts tax return. To register for electronic funds transfer, form EFT-1 must be completed and remitted to the Department by fax (317-232-1851) or mailed to:

Form EFT-1 can be obtained online at www.in.gov/dor/taxforms/pdfs/eft-1.pdf. Questions concerning the registration process can be directed to 317-232-5500.

Every taxpayer who receives more than $1,000 in receipts from the retail sale of utility services is required to file an annual utility receipts tax return, Form URT. Any taxpayer who does not file an annual utility receipts tax return for a taxable year may be required to execute and file with the Department a sworn statement that the taxpayer did not receive more than $1,000 of taxable gross receipts during the taxable year.

When the taxpayer files an annual utility receipts tax return, the taxpayer shall pay to the Department the total utility receipts tax liability incurred by the taxpayer for that taxable year, minus the total estimated payments that were made for that taxable year.

A taxpayer who used a taxable year that ends on December 31 shall file the taxpayer's annual return on or before April 15 of the immediately succeeding year. A taxpayer, whose taxable year does not end on December 31, shall file the annual return on or before the fifteenth day of the fourth month after the close of the taxpayer's tax year.

Corporations are considered to be affiliated if at least 80% of the voting stock of one corporation is owned by the other corporation. Every corporation affiliated with another corporation is affiliated with every corporation that is affiliated with such other corporation. All corporations so affiliated constitute an affiliated group.

Corporate members of an affiliated group that are incorporated in Indiana or are authorized to do business in Indiana may file a consolidated utility receipts tax return.

An affiliated group must elect at the time the group files its first annual return whether or not the group will file a consolidated utility receipts tax return, or whether each corporate member of the group will file a separate utility receipts tax return. Once an election is made, the group must file the utility receipts tax returns in the same manner as the group's first annual return is filed, unless the Department allows the group to change the manner in which it files its utility receipts tax return.

If a consolidated return is filed, the return can be filed by any member of the group incorporated or authorized to do business in Indiana. The filing member shall remain the filing member on all subsequent consolidated returns filed by the affiliated group, unless the Department allows another member to file the group's consolidated return.

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John Eckart

Commissioner