Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update
1. Basis for taxation:
Ad valorem, fair market value. Also, utilities, for the privilege of engaging in such business in this state, pay a license tax of two percent (2%) of the gross receipts from their intrastate business.
2. Property subject to taxation:
Taxable: All property can be taxed, including real estate (immovable), tangible personal (corporeal movables), and intangible personal (incorporeal movables), though only a few forms of intangibles are taxed.
Exempt: Five year exemption (renewable for additional five years) on new manufacturing establishments (does not include land, pipelines across parish, or electric utilities); also motor vehicles are exempt. Property stored in Louisiana while in transit to another state is exempt.
3. Classification (if applicable):
All property (except land assessed at use value) is assessed at a percentage of its fair market value (10% for lands and improvements for residential purposes; 15% for electrical cooperative properties, excluding land; 25% for public service properties, excluding land; and 15% for other property).
Utility -- Class is broken down further: 25% ratio applies to investor-owned electric, gas and water, barge, telephone, and pipelines.
15% ratio applies to railroads, airlines, and electric coops.
There are no class rate differentials.
4. Level of government which determines basis for tax liability - ad valorem property tax:
The Louisiana Tax Commission assesses the operating property of all public utility and railroad property.
All taxable immovable, major movable and other movable properties of a public service company that is non-operating or non-utility is appraised and assessed by the local tax assessor.
5. Report filing and valuation method(s) required by statute for ad valorem taxation:
Required to use all three methods to determine fair market value.
Companies must file financial reports and a listing of all property in the State on an annual basis. Penalties apply after July 1st.
The Commission employs all nationally recognized techniques of appraisal, to best determine fair market value -- the market approach, the cost approach, and/or the income approach -- then assigns such weight to each approach as is appropriate. However, all public service properties of the same nature and kind are appraised in the same manner.
6. Practical application of valuation method(s):
All three approaches to value are considered. Market data, however, is generally scarce, and thus cannot be employed. Original cost unadjusted for obsolescence carries greater weight on companies with recent significant capital investment, whereas other companies are valued more by the income approach.
7. Valuation treatment of large facilities such as power plants, dams, or rail yards:
Such properties are included as part of unit. Allocation of unit value is based on market data, which is used to measure obsolescence.
8. Apportionment method(s) required by statute:
Among local units -- The situs of immovable and other movable property shall determine the local taxing unit to which the assessed value is assigned. For railroads, the assessed value of major movable property shall be allocated among the parishes and municipalities according to the ratio by which the assessed value of the company's immovable and other movable property in the parish bears to the aggregate assessed value of all the company's immovable and other movable property in the state.
9. Practical application or apportionment requirements:
To the state -- Usually use gross income factors, except for railroads which involve various mileage factors.
Among local tax district -- Strictly original cost.
10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:
Apportionment is based on situs.
11. Description of assessment appeals system:
Owners have 30 days from date of original determination of assessed value by the Louisiana Tax Commission.
12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:
Owners who appeal determination must file suit no later than 30 days beyond date of assessed value determination. Deregulation/restructuring has yet to commence in Louisiana.
13. State Government Staffing:
Staff consists of seven employees (full-time equivalent basis).
Law Source(s): Revised section 471837 to 471855