B. Electric Power, Water and Sewerage Companies (G.S. 105-116)
- Basis for Taxation
Every person, firm or corporation, domestic or foreign, and jointly
owned and operated municipal electric projects established under
Chapter 159B, engaged in the business of furnishing electricity,
electric lights, current or power are subject to a franchise or
privilege tax at the rate of 3.22% of the total gross receipts
derived from such business within this state, less certain statutory
deductions. Private sewerage companies are subject to a 6% franchise
or privilege tax on total revenues derived from within this state.
Water systems are subject to a 4% franchise or privilege tax on
total revenues derived from within this state. Receipts received
as contributions in aid of construction are not subject to tax.
Companies subject to the 3.22% franchise tax and municipal corporations
purchasing power for resale are required to collect and remit
to the state a sales tax at the rate of 3% of total billings.
Any excess sales tax collected by the vendor is to be remitted
to the state.
- Due Date of the Return and Tax
The returns are due quarterly and should contain, in addition
to the other information, the total gross receipts from such business
in North Carolina for the preceding calendar quarter. The return
is due by the last day of the month that follows the quarter covered
by the return. Payments by EFT are required if the company is
required to pay tax semi-monthly. Payments are due as follows:
- Electric Power Companies
Effective January 1, 2002, electric power companies must pay
their gross receipts franchise tax in accordance with the
same schedule by which they pay sales and use taxes on electricity.
A company that consistently remits at least $10,000 a month
in sales and use tax must pay the taxes twice a month. G.S.
105-241(b)(2) requires semi-monthly payments be made by electronic
Companies that remit between $100 and $10,000 a month in sales
tax pay on a monthly basis, and all other companies pay on
a quarterly basis.
The semi-monthly payment that covers the period from the first
of the month to the 15th day of the month is due by the 25th
of that month. The semi-monthly payment that covers the period
from the 16th day to the end of the month is due by the 10th
day of the following month.
Monthly payments are due by the 15th day of the month that
follows the month the tax accrues.
A company is not subject to interest and penalty on an underpayment
for a semi-monthly or monthly payment period if it timely
pays at least ninety-five percent (95%) of the amount due
for each period and includes the underpayment with the quarterly
return for those semi-monthly or monthly payment periods.
For franchise tax due on receipts generated on or before December
31, 2001, companies pay tax monthly and are required to remit
at least ninety-five (95%) of the tax due in each of the first
two months of a calendar quarter with any underpayment includable
in the quarterly return. Monthly payments are due by the last
day of the month that follows the month the tax accrues, except
the payment for tax that accrues in May is due by June 25.
- Water & Sewerage Companies
Companies pay tax quarterly when filing the quarterly
return, which is due by the last day of the month that follows
the quarter covered by the report.
- Forms to be Used for Filing
Form CD-310 is to be used by electric companies. Form CD-318 is
to be used by water and sewerage companies.
- Special Exemption
Municipal corporations are not required to remit a franchise
or privilege tax directly to the State, but are required to file
returns and remit the utility sales tax of 3%. The total receipts
of the vendor subject to franchise tax includes sales made to
a municipal corporation.
- Distribution to Municipalities
An amount equal to a tax of 3.09% of local service revenues subject
to the franchise tax levied by this Section (except water and
sewerage services) derived from within a legally incorporated
municipality having either elected officials or interim officials
appointed by the Legislature and from within Urban Service Districts
as defined by the governing board in Chapter 160B, Article 2 is
distributed to such municipality within 75 days after the end
of the calendar quarter.