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Department of Taxation and Finance

Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update


1. Basis for taxation:     Ad valorem property tax. The following public utilities are subject to the tax: railroads, private rail car companies, airlines, telephone companies, electric companies, gas companies, domestic water companies selling at retail (except nonprofit domestic water companies), and pipeline companies.

2. Property subject to taxation

Taxable: Real and personal property.

Exempt: Inventories, materials, and supplies. Intangible property is exempt if property is locally assessed, but not in the case of public utility and other state-assessed property. Also exempt are custom software owned by railroads and airlines, and property of wireless companies operating under FCC licenses.

3. Classification (if applicable):

Property class assessment ratios:

Class 1 Residential real estate   9.15% (a)
Class 2 All other property 29%
(a) Percentage for 2002. Percentage must be adjusted each year.

4. Level of government which determines basis for tax liability - ad valorem property tax:    State Property Tax Administrator.

5. Report filing and valuation method(s) required by statute for ad valorem taxation:

Reporting Requirements - Each public utility must file an annual statement, on a form provided by the Property Tax Administrator, containing such information concerning itself and all of its property, wherever situated, as the administrator may reasonably require for the purpose of determining the actual value of the utility in the state, and for apportioning the valuation for assessment of the utility among the counties of the state. If the utility fails to file the statement, a penalty is assessed in the amount of $100 for each day the statement remains delinquent; the late filing penalty, however, may not exceed $3,000.

Valuation Factors - Unit rule method. In applying this method, the Property Tax Administrator shall give consideration to the following factors and assign such weight to each of them as in his judgment will secure a just value of the public utility as a unit: (a) tangible property comprising its operating plant, (b) intangible property, such as special privileges, franchises, contract rights and obligations, and rights of way, (c) gross and net operating revenues during a reasonable period of time not to exceed the most recent 5-year period, capitalized at indicative rates, and (d) average market value of outstanding securities during the preceding calendar year, if such market value is determinable. If in the judgment of the administrator the books and records of the utility accurately reflect its tangible property, its intangibles, and its earnings within the state during the most recent 5-year period, the administrator may determine from such books and records the actual value of its property and plant within the state and need not determine the entire value of its property and plant both within and outside the state.

6. Practical application of valuation method(s):     Unit value method. In applying the method, the state Property Tax Administrator uses all three approaches to value, with the weighting of each approach varying by company at his discretion.

7. Valuation treatment of large facilities such as power plants, dams, or rail yards:     Power plants are state assessed and are valued as indicated above. Other large facilities are valued locally.

8. Apportionment method(s) required by statute:

To the state -

Railroads - Track mileage.
Other utilities - In such proportion as in the Property Tax Administrator's judgment will fairly represent the value within the state.

Among local units -

Railroads -Track mileage.
Other utilities - In such proportion as in the Property Tax Administrator's judgment will fairly represent the value within each county.

9. Practical application or apportionment requirements:

To the state -

Railroads -Track mileage.
Other utilities - Net book value (historical cost less depreciation.

Among local units -

Railroads -Track mileage.
Other utilities - Historical cost.

10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:     Such properties are usually in one assessing district. Therefore, apportionment treatment is not applicable in these instances.

11. Description of assessment appeals system:

First level of appeal for state-assessed properties is at Board of Assessment Appeals. Further appeal can be made to State Court of Appeals, and then to the State Supreme Court.

12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:

Deregulation/restructuring is not yet active in Colorado. Valuation methodology has not been affected by this inaction.

13. State Government Staffing:     Staff consists of four employees (full-time equivalent basis).

Law Source(s):     Colorado Revised Statutes - as cited in Macmillan's State and Local Taxes

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