Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update
1. Basis for taxation:
|Gross Receipts Tax||Communications|
|Car Company or freight line and
|Telecommunications (b)(c)||Yes||2.37%||6.8% + Local Rate|
|Motor Vehicle Carrier (c)||Yes||--||--|
|(a) Airplanes are constitutionally exempt
(b) "Communications services" means the transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals, including cable services, to a point, or between or among points, by or through any electronic, radio, satellite, cable, optical, microwave, or other medium or method now in existence or hereafter devised, regardless of the protocol used for such transmission or conveyance. The term does not include: (a) Information services, (b) Installation or maintenance of wiring or equipment on a customer's premises, (c) The sale or rental of tangible personal property. (d) The sale of advertising, including, but not limited to, directory advertising, (e) Bad check charges, (f) Late payment charges, (g) Billing and collection services, (h) Internet access service, electronic mail service, electronic bulletin board service, or similar on-line computer services.
(c) The Communication Services Tax rate is applied to the "Sales Price." "Sales price" means the total amount charged in money or other consideration by a dealer for the sale of the right or privilege of using communications services in this state, including any property or other services that are part of the sale. The sales price of communications services shall not be reduced by any separately identified components of the charge that constitute expenses of the dealer, including, but not limited to, sales taxes on goods or services purchased by the dealer, property taxes, taxes measured by net income, and universal-service fund fees.
(d) Licensed motor vehicles are exempt.
2. Property subject to taxation:
Taxable: Real and tangible personal property
Exempt: Licensed motor vehicles, airplanes, inventory items
3. Classification (if applicable):
Agricultural land is generally assessed based upon the capitalization of the income to be produced by the land in such a use and thus approximates the amount that could be invested consistent with a reasonable return.
4. Level of government which determines basis for tax liability - ad valorem property tax:
Railroads, car companies, and freight line and equipment companies -- State Department of Revenue.
Other utilities -- county (67 units)
5. Report filing and valuation method(s) required by statute for ad valorem taxation:
Filing for Railroads:
(1) It shall be the duty of each railroad or railroad terminal company to return, on or before the first of April annually, a full and complete return verified by an officer or authorized representative of the company, in such form as the Department of Revenue may prescribe, showing: (a) Total length of such railroad everywhere; (b) Total length and owner's estimated value of such main track, branch, switch, spur, and sidetracks. List of lots not leased or rented and terminal facilities in this state as of January 1; (c) The total number of owner's estimated value of all rolling stock in this state as of January 1; (d) The value of appurtenant supplies in this state as of January 1; (e) A stock and bond value summation; (f) A statement of cost of additions and betterments made in the previous year; (g) A report of the following statistics for each state in which the railroad operated in the past year: All track miles; Railroad operating revenue; Ton and passenger miles; Train miles; Car miles; Net investment in transportation property; (h) A return of railroad equipment leased from others; (i) A return of railroad equipment leased to others (data same as requested in (h)); (j) An inventory of non-operating property in this state as of January 1 including book value.
(2) It shall be the duty of all railroad or railroad terminal companies owning land or any other real estate in any county in this state to submit to the Department and the county property appraiser a full and complete list showing the description of all lands or lots owned and used by them in daily operation of the railroad. Such list must reflect the following information: (a) either the legal description of the property including section, township and range, or the description used by the county property appraiser, (b) location of property, (c) parcel number assigned by appraiser, (d) actual railroad use, i.e., right-of-way, storage, office, shop, etc., (e) description of improvements.
Filing for Private Car and Freight Line and Equipment Companies: It shall be the duty of all private car line and freight line and equipment companies operating rolling stock in Florida to return annually for taxation, on or before April 1, the average number of their cars which are normally and usually located in this state. The return shall be in such form as the Department may prescribe, showing such of the following facts as the Department may require in the form and at the time prescribed by it: (a) history and corporate information, (b) name and address of principal officers, (c) car description and cost data.
Valuation of Railroads: Unit Rule Method of Valuation - An appraising method used to value an entire operating property, considered as a whole with minimal consideration being given to the aggregation of the values of separate parts. The rights, franchises, and property essential to the continued business and purpose of the entire property are being treated as one thing, and having but one value in use.
(a) The Department shall examine the returns required by these regulations and such other information as the Department may obtain and shall determine the just value of the railroad and railroad terminal's entire operating system, whether located entirely within this state or partially within this state. Just value shall be determined by application of the unit rule method of valuation.
(b) In application of the unit rule method of valuation, the Department shall consider the value indications obtained from three approaches to the system value, i.e., (1) cost approach, (2) market or stock and debt approach, (3) capitalized earnings or income approach, assuming there is enough conclusive evidence within the respective approach to render it a valid indicator of value. If the Department feels that there is not enough data available to render one or more of the approaches reliable, the Department shall base its decision on that information which it determines is conclusive enough to indicate just value.
(c) The Department shall allocate that portion of the total system value of railroad and railroad terminal companies to this state based on factors which are representative of the ratio that the company's property, activity, and productiveness in this state bears to the company's property, activity, and productiveness everywhere. Such factors include: (1) All track miles, (2) Net investment in transportation property, (3) Ton and passenger miles, (4) Total train miles, (5) Total car miles, (6) Railway operating revenue.
6. Practical application of valuation method(s):
Railroads - Unit value method is used. The three approaches to value are used. The heaviest weightings of the factors depend on which approaches are deemed most reliable in a particular appraisal. Income approach is direct capitalization, market approach is stock and debt and/or sales comparison and cost approach is historic cost less depreciation using the "blue chip" methodology for estimating obsolescence.
Private car and freight line and equipment companies - property is valued based on the investment in cars less statutorily prescribed depreciation. To the net book value the department applies the proportion of miles operated in Florida to miles operated everywhere.
Locally assessed property - Utilities are assessed locally. There is no statutorily or regulatory prescribed methodology such as the unit rule method for valuing utilities. Methodology varies depending on the size and complexity of the taxpayer and the professional judgment of the local county property appraiser.
7. Valuation treatment of large facilities such as power plants, dams, or rail yards:
Methodology varies depending on the size and complexity of the taxpayer and the professional judgment of the local county property appraiser. Rail and private carline property is valued as described previously.
8. Apportionment method(s) required by statute:
To the state --
Railroads - Based on factors which are representative of the ratio that the company's property, activity, and productiveness in the state bears to the company's property, activity, and productivity in the entire railroad system, including (a) all track miles, (b) net investment in transportation property, (c) ton and passenger miles, (d) total train miles, (e) total car miles, and (f) railway operating revenue.
Car companies and freight line and equipment companies - Not applicable.
Locally assessed property - Not indicated in statute.
Among local units --
Railroads -- (a) based on actual situs or (b) in the case of property not having situs in a particular county, based on track miles.
Car companies and freight line and equipment companies - Based on number of track miles and the location of mainline track of the respective railroads over which the rolling stock was operated in the preceding year in each taxing jurisdiction.
Locally assessed property -- not indicated in statute.
9. Practical application or apportionment requirements:
To the state --
Railroads - see #8 above.
Car companies and freight line and equipment companies -- Not applicable.
Locally assessed property -- Since apportionment methods for utilities are not prescribed by statute or regulation, practice varies and is sometimes controversial. Sometimes it is based on situs. In the case of unit rule method property, it varies from net cost, gross cost, and others depending on the professional judgment of the local county property appraisers.
Among local units --
a. Value of property having situs in a district (e.g. terminals, tract, and roadbed) -- according to location of property.
b. Other property -- apportioned by track miles.
Car companies and freight line and equipment companies -- See #8 above.
Locally assessed property -- (a) based on actual situs or (b) in the case of property not having situs in a particular tax district, as apportioned by the utilities or, when using the unit value method, according to the location of tangible property or customers (varies).
10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:
See 8 & 9 above.
11. Description of assessment appeals system:
Railroads and private carlines -Taxpayers are afforded the right to an Informal Conference, in lieu of an administrative hearing, before the Executive Director or the Executive Director's designee. The next step is state circuit court.
Locally assessed property - Taxpayers can appeal their assessment first to the county property appraiser. Second, they can appeal to a local county's Value Adjustment Board. Subsequent appeals are to the state circuit court.
12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:
Florida has taken a conservative approach to deregulation of electric utilities. The Public Service Commission is taking a "wait and see" position and evaluating the deregulation experience in other states. A plan to split off a Regional Transmission System (Grid Florida) is still being considered. There has been little or no impact on valuation and apportionment methods used.
13. State Government Staffing:
Railroads and private carlines - Consists of one Tax Specialist Administrator and two Senior Tax Specialists.
Law Source(s): Florida Administrative Code, Chapter 12D-2