ECN Forum Forums General Topics of the Trade General Discussion Area Sales Tax on Sub-Metering?

Need some advise.

Scenario:
Large office Bld 60,000sq ft.
Broken into 4 units.

1 main POCO meter
4 emon-demon subs
no house load meter.(for parking lot lights and general soffit lights and such)

POCO sends one bill to land management company.

Land Mangement sends out 4 bills to tennants, and adds sales tax on top of usage bill.

EX. Total POCO bill $10,000/month
4 equal tennants, equal usage $2,500/month.
Tennants bill is 2500x.o6% ($150)sales tax=$2650.
4 tennants x 2650=$10,600 being billed on the original invoice of $10,000.


I didn't think they could do this, I thought the Management companies were restricted in making a profit on energy use, and/or generation.


State is PA.

Any help if this is actually legal to charge sales tax on something you are not selling?


Dnk......

Normally, any business collecting sales tax doesn't get to keep it; it goes to Uncle Sam.

I have no idea wether they get to do this legally or not, every state is different, but if it's billed as "sales tax" and it's actually a profit generator, that's a fraud everywhere. It has to go to a taxing authority if it's a tax.

Suggest two places to ask if it is legal in your state. The public service comission (or agency that regulates the power companies) and the state tax agency.
Depending on the laws and regulations that could be perfecty legal of a felony crime.
In my state of Nebraska, it would be a crime. Two reasons since our power compaies are quasi goverment agencies with elected board members the resale of power is illegal here, and there is no sales tax on power ( at least not yet).

DNK:
Here in NJ, no 'profit' can be made on check metering. Some wording to the effect of " reasonable charges for administrative costs" covers what is basically a 'service charge'; which recovers the costs to read the meters and process the tenant billing.

Sales tax would be a "NO-NO" here, but if it was collected in 'error' it must be remitted to the State.

We provide check-meter reading and billing for one complex, and it is a real pain!

John

Follow-up.

From the POCO:

All type GS services are state taxable, unless exempt status is given. IE churches, non-profit groups, ect.

It is on page 2 of the bill, which I never recieved from the land management company.

Thanks for the input fellas.

Dnk.....