Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update
1. Basis for taxation:
Actual value (defined by statute as the price at which property may actually have been sold, either in the base year or the current taxable year) must be considered, but shall not be controlling. Instead such selling price, estimated or actual shall be subject to revision by increase or decrease to accomplish equalization with other similar property in the taxing district. In arriving at actual value, the cost, comparable sales, and income approaches must be considered in conjunction with one another. Except for gas companies, railroads and utilities are subject to gross receipts taxation.
2. Property subject to taxation:
No local property taxes are levied on utility realty (personalty is not taxed in Pennsylvania). In lieu of these taxes a statewide realty tax, known as the Pennsylvania Utilities Real Property Tax (PURTA) is levied on utility realty. The tax is computed as a ratio of the utility real estate taxes not levied locally to the total state taxable value (current market value, which is the equalized locally assessed value of utility property). Local assessors do assess property of utilities, however all operating property of utilities is exempt from local taxation. Local assessors enter the exempt values on their respective local rolls, and those values are the basis for reimbursement from PURTA revenues. Since 2000 electric generating facilities are no longer subject to PURTA. Such facilities are now taxed as well as assessed locally.
The following properties are wholly exempt from taxation at both the state and local level: (a) utility easements; (b) railroad beds or rails, land owned or used by a railroad as a right-of-way for a rail line, and superstructures thereon on (exemption does not include stations, buildings, warehouse, shops, engine houses, plants or miscellaneous structures or the land appurtenant thereto); (c) pole, transmission, tower, pipe, rail or other lines, whether or not said lines are attached to the land or any structure or enclosure which is physically affixed to the land.
3. Classification (if applicable):
4. Level of government which determines basis for tax liability - ad valorem property tax:
Local assessors are responsible for valuing railroad and utility real property. However, system property is exempt from local taxation. In lieu of local property taxation on these properties, Pennsylvania Department of Revenue imposes the PURTA, as described above. System property is essentially valued locally but taxed at the statewide level. Nonsystem properties are both valued and taxed locally.
5. Report filing and valuation method(s) required by statute for ad valorem taxation:
State Taxable Value, defined as current market value (equalized local assessed value of utility property) must be reported.
6. Practical application of valuation method(s):
See #5 above.
7. Valuation treatment of large facilities such as power plants, dams, or rail yards:
All these facilities are valued locally, with appraisal methodologies chosen by each county assessor. (State has relatively little oversight on local assessment procedures.)
8. Apportionment method(s) required by statute:
9. Practical application or apportionment requirements:
Value is not apportioned. However, revenues collected under PURTA are apportioned to each assessing unit based on their real property tax equivalent, the amount of taxes which a local taxing authority could have imposed on utility realty but for PURTA, and is the product of the locally assessed value of utility realty times the local property tax rate proportion of total exempt value of utility real property in Pennsylvania.
10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:
Not applicable. Power plants are now taxed locally as well as assessed locally.
11. Description of assessment appeals system:
On assessment appeals, first level is with county board of assessment review. Further reviews can be made in the Court of Common Pleas and up to Commonwealth Court. Plaintiffs must pay taxes on uncontested level of assessment. PURTA can itself be appealed, but only at administrative level.
12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:
Electric generation has undergone divestiture from public service companies since 2000. Local assessing units have faced several court challenges on assessment of these plants, which formerly were taxed at the state level.
13. State Government Staffing:
Staff consists of five employees (full-time equivalent basis).
Law Source(s): Pennsylvania Statute Section 11 01-A.