Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update
1. Basis for taxation:
2. Property subject to taxation:
All real property, as well as tangible personal property is taxable. Intangible personalty is exempt. Electric power generating companies pay a gross receipts tax if exempt from corporate franchise and income tax.
3. Classification (if applicable):
Primary residential property is assessed at 25 percent of market value. Other property is assessed at 100 percent of market value.
4. Level of government which determines basis for tax liability - ad valorem property tax:
The State Tax Commission assesses all property of utilities, including railroads. Property owned by railroads or utilities but not part of an operating system is valued by counties.
5. Report filing and valuation method(s) required by statute for ad valorem taxation:
Railroads and utilities must file reports with the State Tax Commission. The reports contain data on property inventory, original costs, asset values, and revenues. No specific valuation methods are required in statute but the law does define value in terms of "full cost or comparable sales value," reduced to account for sales fees, transaction costs, etc.
6. Practical application of valuation method(s):
The Tax Commission uses the unitary method, employing cost, income and market approaches. The cost-based value is usually just a net book value. Stock/debt is the basis for the market approach, but is seldom used.
7. Valuation treatment of large facilities such as power plants, dams, or rail yards:
Rail yards and power plants are valued in the same manner as in #6 above. There are no privately owned dams in Utah.
8. Apportionment method(s) required by statute:
All property other than rolling stock must be apportioned between taxing units according to value. Rolling stock must be apportioned according to route mileage in the taxing unit in comparison to total route mileage in the state.
9. Practical application or apportionment requirements:
Allocating railroad property is done according to procedures developed by the Western States Association of Tax Appraisers (WSATA), which is property between Utah and other states, the Commission uses the prescribed formula, based on factors such as miles of track, gross revenue, and operating income. To allocate utility property, formulas based on those prescribed by the WSATA are used. These formulas use factors such as original cost, gross revenue and net operating income, with primary emphasis given to original cost. Allocation among taxing units is based on the ratio of original cost for the property within the district to the original cost for the property in the state.
10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:
Apportionment procedure is the same as in #9.
11. Description of assessment appeals system:
Initial hearing occurs within the Property Tax Division for resolution of dispute. The next level occurs at a proceeding held by the state tax Commission, presided by an administrative law judge. Plaintiff may appeal further to District court (appellate) or to State Supreme Court (de novo). County assessing units have the right to appeal state assessed values in District or State Courts.
12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:
No deregulation or restructuring has yet occurred in Utah.
13. State Government Staffing:
Staff consists of six employees (full-time equivalent basis).
Law Source(s): Utah Constitution, Art. Xiii; Utah Code, Title 54, Public Utilities; Utah Code, Title 59, Revenue and Taxation