Plain Text Law

Title 18 — Subtitle 08. Public Service Company Franchise Tax

Chapter 01. Administration

Regulation .01 Definitions.Copy Citation

A.
In these regulations the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Company” means a person engaged in electric, gas, or telephone business in this State. “Company” includes an individual, partnership, corporation, receiver, or other entity.
(2)
“Department” means the State Department of Assessments and Taxation.
(3)
“Electric company” means a company engaged in the transmission, distribution, or delivery of electricity in the State.
(4)
“Gas company” means a company engaged in the transmission, distribution or delivery, of natural gas in the State.
(5)
Gross Receipts.
(a)
“Gross receipts” means the total receipts that occur as a result of the company doing business in the State as an electric, gas, or telephone company during the calendar year. For gas and electric companies, “gross receipts” means all revenues included in the operating revenue accounts as prescribed by the Federal Energy Regulatory Commission, unless otherwise specified by Maryland law or regulation.
(b)
For a telephone company providing interstate long distance telecommunications service, gross receipts are computed based on services charged to a Maryland address. The revenues include the gross charges from the sale of long distance telecommunications service that originates or terminates in Maryland and for which a charge is made to a service address located in the State, regardless of where the amount is billed or paid.
(c)
Gross receipts includes all surcharges imposed on customers, including the environmental surcharge and surcharges to recover State or local taxes imposed on the company.
(d)
Exclusions from gross receipts are as provided in Tax-General Article, §8-401(c), Annotated Code of Maryland.
(6)
“State” means:
(a)
A state, possession, or territory of the United States;
(b)
The District of Columbia; or
(c)
The Commonwealth of Puerto Rico.
(7)
“Tax” means the public service company franchise tax imposed under Tax-General Article, §§8-402 and 8-402.1, Annotated Code of Maryland.
(8)
Telecommunications Service.
(a)
“Telecommunications service” means the:
(i)
Transmission of any interactive electromagnetic communications, including voice, image, data, and any other information, by means of wire, cable, fiber optics, laser, microwave, radio wave, satellite, or other facility, or any combination of these media; or
(ii)
Provision of facilities and services for the transmission of any interactive electromagnetic communications.
(b)
“Telecommunications service” includes:
(i)
Basic telephone service, including any facility or service provided in connection with basic telephone service;
(ii)
Toll telephone service and teletypewriter or computer exchange service;
(iii)
Business service; and
(iv)
Directory assistance.
(9)
Telephone Company.
(a)
“Telephone company” means a company that owns lines for the reception, transmission, or communication of messages by telephone or teletype, or that lets, licenses, or sells telecommunications service.
(b)
“Telephone company” includes companies operating as local exchange carriers, interexchange carriers, or resellers of telecommunications service.
(c)
“Telephone company” does not include a radio common carrier, a person that owns a customer-owned coin operated telephone, or a company that owns and operates lines for telecommunications service exclusively for its own use.

Regulation .02 Companies Subject to the Tax.Copy Citation

A.
The tax has two parts:
(1)
A gross receipts tax on electric, gas, and telephone companies; and
(2)
For electric and gas companies, a tax based on the kilowatt hours of electricity or therms of natural gas delivered by the company for final consumption in the State.
B.
County and municipal utilities and nonprofit electric cooperatives are not subject to the gross receipts tax, but are subject to the tax based on kilowatt hours of electricity delivered. County and municipal utilities are not subject to the tax based on therms of natural gas delivered.
C.
An interstate natural gas pipeline is subject to both the gross receipts tax and the tax based on therms of natural gas delivered if the company delivers natural gas for final consumption to a customer in this State.

Regulation .03 Inter-Company Transactions.Copy Citation

A.
The incidence of the gross receipts tax is intended to fall on a company providing services to the ultimate retail consumer. Therefore, in order to avoid taxing the same transaction more than once, any revenues received by a company for services that will later be resold may not be considered gross receipts as long as the reseller is subject to the tax on those revenues in this State or any other state. For example:
(1)
Network access, billing, or other revenues derived from the provision of exchange access or other services to an interexchange carrier are not considered gross receipts for a local exchange carrier;
(2)
Revenues derived from the transmission of gas or electricity to another gas or electric company for the purpose of resale are not considered gross receipts.
B.
The amount and type of all revenues excluded from gross receipts shall be clearly identified in the filing of the annual tax return. The information necessary to support the amount of the exclusions shall be retained and made available to the Department upon request or audit.

Regulation .04 Filing Forms and Additional Information.Copy Citation

A.
Forms shall be filed with the Department at the locations specified on the form.
B.
Each report, application, or response filed for the tax shall be made under oath with a declaration preceding the signature of the author that it is made under penalties of perjury.
C.
A company that anticipates a total tax liability of at least $1,000 for a taxable year shall file a declaration of estimated tax with the Department by April 15 of the taxable year. The company shall pay the Department an amount equal to at least 25 percent of the tax liability for the full taxable year on April 15, June 15, September 15, and December 15.
D.
On or before March 15 annually, each company shall file with the Department a return detailing all operating and nonoperating revenues for the preceding calendar year. Each company shall attach to the return:
(1)
A check made payable to the Department for the remaining tax due for the period covered by the return; and
(2)
Financial statements and a copy of the company’s annual report as submitted to the appropriate regulatory authorities.
E.
If a company fails to file the return as required under this regulation, the Department will mail to the company a notice and demand for the return. If the return is not filed within 30 days of the mailing of the notice, the Department will estimate the company’s operating revenues and assess an additional penalty of up to 25 percent of the estimated tax liability.
F.
Returns Filed Without Supporting Documents.
(1)
If a company files a return but fails to include financial statements and a copy of the company’s annual report as required in §D(2) of this regulation, the Department will mail to the company a notice and demand for the supporting documents. If the supporting documents are not filed within 30 days of the mailing of the notice, the Department will estimate the company’s operating revenues and assess an additional penalty of up to 25 percent of the estimated tax liability.
(2)
If, at the time of filing a return, a company’s annual report has not been submitted to the appropriate regulatory authorities, the company shall furnish to the Department the date that it is due to be submitted. If the company’s annual report is not filed with the Department within 30 days of the date that it is due to be submitted, the Department will mail to the company a notice and demand for the annual report. If the annual report is not filed within 30 days of the mailing of the notice, the Department will estimate the company’s operating revenues and assess an additional penalty of up to 25 percent of the estimated tax liability.
G.
A company claiming a telephone lifeline credit or a credit for the purchase of Maryland-mined coal shall include with the annual return information detailing the basis for the calculation of the credit. In order to qualify for a Maryland-mined coal tax credit, a company must be able to document that the coal was directly purchased from a mine that extracted the coal from a location in Maryland.
H.
A long distance telephone company shall be allowed a credit for the amount paid, not to exceed the Maryland tax due, upon proof that it has paid a properly due excise, sales and use, or gross receipts tax in another state on a sale from which the gross receipts are subject to Maryland tax.

Regulation .05 Assessments, Appeals, and Penalties.Copy Citation

A.
If, after an audit of the tax return, the Department determines that the tax is more than the amount shown on the return, the Department will mail to the company a deficiency assessment for taxes due.
B.
Interest and penalty shall be imposed if a company fails to pay an installment when due, or estimates a tax that is less than 90 percent of the amount due for the current taxable year and less than 110 percent of the tax paid for the prior taxable year.
C.
Failure to file a return or pay the tax when due will result in the imposition of interest and penalty.
D.
A company may appeal an assessment within 30 days of the date of mailing of the assessment by applying in writing to the Department for a revision or abatement of amounts due. The company may request an informal hearing on the issue. Following the application or hearing, the Department will take appropriate action and issue a final assessment to the company.
E.
A company may appeal a final assessment to the Maryland Tax Court within 30 days after the date of mailing of the final assessment.