HB276 By Representative England RFD Ways and Means General Fund Rd 1 12-MAR-15

SYNOPSIS: Currently, municipal utility corporations are not paying the state license tax equal to 2.2% on each $1 of gross receipts. Revenue generated by the tax is distributed to the State General Fund and to the Special Mental Health Fund. This bill will require any public, private or municipal utility corporation to pay the license tax. This bill will distribute the additional revenue generated from removing this exemption to the State General Fund. This bill will also repeal the requirement that the Alabama Municipal Electric Authority make an in-lieu-of tax payment.

A BILL TO BE ENTITLED AN ACT

To amend Sections 11-50A-7, 40-21-53 and 40-21-55, Code of Alabama 1975, to require any public, private or municipal utility corporation to pay the state 2.2% license tax; to repeal the requirement that the Alabama Municipal Electric Authority make an in-lieu-of tax payment; and to provide further for the distribution of revenues received from the tax.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. Sections 11-50A-7, 40-21-53 and 40-21-55, Code of Alabama 1975, are amended to read as follows:

§11-50A-7.

All bonds, bond anticipation notes, and notes issued by the authority, the interest thereon, and the income therefrom shall be forever exempt from all taxation in the state. All income of the authority, all obligations, lease agreements, and mortgages of the authority, all conveyances by or to the authority, and all lien notices or other filings with respect to the property of the authority and the transfer thereof shall be forever exempt from any and all taxation in the state. The purchase, sale, or use of property by the authority shall be exempt from all sales, use, and license taxes levied by the state and all political subdivisions of the state. All property of the authority shall be exempt from ad valorem property taxation. Nevertheless, the authority, or any agent of the authority designated for the purpose of constructing, maintaining, or operating any project of the authority, shall pay to any validly constituted taxing authority of the state, or any county or municipality or other political subdivision thereof, that levies ad valorem, sales, use, license, or severance taxes, payments in lieu of those taxes equal in amount to the ad valorem, sales, use, license and severance taxes which would have been paid by private persons engaged in the same or similar business within the state with respect to real and personal property owned, leased, or otherwise used, and with respect to the purchases, sales, or use of property, within the taxing jurisdictions of those entities had the properties of the authority been owned, leased, used, or purchased by such private persons. Payment of such amounts in lieu of taxes shall be made at the time taxes of such nature would be payable by private persons and shall be received, treated, deposited, and appropriated by those taxing jurisdictions for all purposes in the same manner as if those amounts were payments of those taxes. Payments in lieu of taxes shall be enforceable by the taxing authority in civil action brought by such taxing authority. It is the intent of the Legislature that while the authority is a political subdivision of the state, the business in which it is engaged should be responsible for the payment, in lieu of taxes, of amounts which other similar businesses are required to pay, to support essential government services. In the event of the dissolution of the authority pursuant to Section 11-50A-27, if any of the then remaining reserves of the authority provided for in this chapter (except those funded with proceeds of bonds, bond anticipation notes, or notes of the authority) are distributed (other than for those purposes for which such reserves were established or as credits respecting amounts previously overbilled by the authority) to municipalities contracting with the authority pursuant to Section 11-50A-17, the authority shall, with respect to those distributions, pay to the state, in lieu of income taxes levied by the state, amounts equal to the income taxes that would be payable by the authority with respect to the amounts distributed as if the authority had taxable income in the year of the distributions in the amount of such distributions and the authority were an entity subject to income taxes. Such amounts shall be payable at the time and received, treated, and appropriated by the state for all purposes in the same manner, as if those amounts were payments of state income taxes.

The authority shall also pay a fee to the state in the amount of 2.2 percent of the gross receipts in lieu of taxes from all electric power sold by the authority. The proceeds of such fee shall be deposited and paid to the general fund.

§40-21-53.

(a) Each person, firm, or corporation, including any corporations or municipalities operating an electric or hydroelectric public or private utility; or a gas public or private utility; or any privately owned and operated wastewater system as defined in Section 22-25B-1 which is required by Chapter 25B of Title 22, to be operated and maintained by a wastewater management entity certified by the Public Service Commission; or any other public, private or municipal utility, whether now paying or not paying, now paying the two and two-tenths percent shall be subject to the provisions of this section and shall pay to the state a license tax equal to two and two-tenths percent on each $1 of gross receipts of such public utility for the preceding year; except, that gross receipts from the sale of electricity for resale by such electric or hydroelectric public utilities and gross receipts from the sale of electricity to the persons identified in subsection (b) of this section shall be deducted in computing the amount of tax due hereunder. For the first year's business, where an existing electric public utility is taken over, such license tax payable to the state shall be equal to two and two-tenths percent on each $1 of gross receipts for the preceding year of the electric utility taken over, after deduction of gross receipts derived from sales of electricity for resale and gross receipts from the sale of electricity to the persons identified in subsection (b) of this section and less whatever sum the prior operators shall have paid as such license tax on the gross receipts for that year. Where no existing electric public utility is taken over, the license tax for the first year upon such utility shall be based upon the first year's business, computed as provided hereinabove, but shall in no event be less than $100 for the first year's business. Any person, firm, or corporation establishing a new electric public utility shall pay to the state the sum of $100 and shall also at the same time execute a bond payable to the State of Alabama to insure payment of whatever sum in addition to such $100 may be due when, at the end of the first year the amount of gross receipts for the year is ascertainable. Such license tax shall be paid to the Department of Revenue by check made payable to the Treasurer and shall be paid quarterly, one fourth on October 1, one fourth on January 1, one fourth on April 1 and one fourth on July 1 and shall become delinquent on the fifteenth day of each of said months. Payment shall be accompanied by a statement made by the president or other officer of the public utility or by the owner thereof, giving the name of the person, firm, or corporation owning and operating such public utility and the principal place of business thereof, together with a statement under oath of the amount of gross receipts of such public utility for the preceding year. The books of every person, firm, or corporation operating such public utility shall be at all times open to the inspection of the Department of Revenue. Any person failing to make such sworn statement or willfully making a false statement of the gross receipts of such public utility shall be guilty of a misdemeanor and, upon conviction thereof, shall be fined not exceeding $500 and shall also forfeit to the state three times the amount of the license for such public utility, but no license under this schedule shall be paid to the county or counties.

(b)(1) On or after October 1, 1981 any person who is 62 years of age or older or totally and permanently disabled and such person is head of a household and does not share his or her residence with more than one other adult person who is less than 62 years of age and who receives electricity at such residence from a utility which is subject to the 2.2 percent license tax levied in subsection (a) of this section shall be entitled to qualify, in accordance with the provisions of subdivision (2) of this subsection, for a credit on his or her monthly electric bill in the amount of the exemption from the 2.2 percent license tax with respect to sales of electricity to such person provided in subsection (a) of this section; provided that the combined gross incomes of all persons who live at the residence of such person 62 years of age or older or such totally and permanently disabled person shall not exceed $12,000 annually. Eligibility for this credit applies only to the extent and amount that it is billed to the customers as a normal requirement under its rates.

(2) Any person who seeks to qualify for the credit provided in subdivision (1) of this subsection shall make application to the Department of Human Resources in accordance with the rules promulgated by the Department of Human Resources for the implementation and enforcement of this section. The Department of Human Resources shall periodically notify, in writing, each electric utility in the state which is subject to payment of the 2.2 percent license tax levied in subsection (a) of this section regarding those customers who are entitled to receive the monthly credit. Within 45 days after receipt of notification for such monthly credit the electric utility shall commence providing such credit for gross receipts license tax that otherwise would be billed.

(3) Any person who wrongfully qualifies for such exemption by giving false information shall be guilty of a misdemeanor and upon conviction may be fined not to exceed $500.

§40-21-55.

All revenues collected under the provisions of Section 40-21-53 shall, after deduction of the cost of collection, be distributed in the following manner:

(1) Eighty-five Sixty-four and three-tenths percent of the balance remaining after deduction of the cost of collection shall be deposited in the Special Mental Health Fund to be used for mental health purposes; and

(2) Fifteen Thirty-five and seven-tenths percent of the balance remaining after deduction of the cost of collection shall be deposited in the General Fund.

Section 2. The provisions of this act are severable. If any part of this act is declared invalid or unconstitutional, that declaration shall not affect the part which remains.