HomeMy WebLinkAboutUtilities 2009-11-24 Item 3D - Discussion - Sewer Excise Tax Refund from WA State Department of RevenueCity of Tukwila
INFORMATIONAL MEMORANDUM
TO: Mayor Haggerton
Utilities Committee
FROM: Interim Public Works Director
DATE: November 4, 2009
SUBJECT: Sewer Excise Tax Refund from the Department of Revenue
ISSUE
BACKGROUND
RECOMMENDATION
Information only.
W'PW EnntOTHER \Pat Rredintinfo Memo DOR Sewer Excise Tax Refund doc
Jim Haggerton, Mayo;
The City recently received a refund on sewer utility excise taxes representing a multi -year audit
that more accurately defined the sewer infrastructure and assets subject to State taxes.
Along with several other municipalities, Tukwila began a process in 2002 to work on an excise
tax refund request. This request was primarily based on a change in the way sewer revenues
are classified for tax purposes. The City entered into an agreement with the FCS Group to
gather data needed on the City's behalf and address any other tax issues that may surface
during the review.
According to WAC 458 -20 -179, sewer revenues subject to public utility tax is split into collection
and transmission components. Only the collection portion of the sewer system is taxed at the
public utility rate. Also, amounts paid to another for jointly provided services (i.e. Metro regional
wastewater treatment) are deductible from gross service revenues prior to the collection/
transmission split. Other details specified by the WAC for deductions are distribution of water
through an irrigation system, sustained credit losses, and payments related to damages to the
utility's plant caused by individuals, etc.
This entailed a Herculean effort on the part of both the Public Works and Finance departments
to supply the necessary background data to support the refund for the years 1998 to 2007.
Discerning the split of what belonged to transmission and what belonged to collection was
possible through the City's GIS mapping of the utility. Sewer lift stations were in the exempt
portion as well. The summary of all this effort found Tukwila with total expenses relating to
transmission of 56.39% and collection of 43.61% resulting in a refund of $407,965.00 from the
Department of Revenue.
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