Gross receipts from customer deposits that are held as
security for payment of utility billings are not subject to tax until
recognized as income. A deposit that is not applied to a customer's bill or
refunded to a customer when utility services are discontinued shall be presumed
to be abandoned property if the customer does not claim it within the period
established under A.R.S. Title 44, Chapter 3. Customer deposits that are
presumed to be abandoned property under A.R.S. Title 44, Chapter 3, shall be
reported and delivered to the Department as unclaimed property. Amounts
delivered to the Department as unclaimed property are not included in the tax
base. For example:
1. A utility
company requires a new customer to deposit $150 before it provides utility
service. The customer moves and notifies the utility company to discontinue
service. The customer's final bill is $130. The utility applies the deposit to
the final bill and refunds $20 to the customer. The amount applied to the
utility bill is recognized as income and subject to tax. The amount refunded to
the customer is not recognized by the utility as income and is not subject to
tax.
2. A utility company requires
a new customer to deposit $150 before it provides utility service. The customer
notifies the utility company to discontinue service. The customer's final bill
is $130. The utility applies the deposit to the final bill. The customer does
not provide a forwarding address to the utility. Therefore, the utility company
is not able to refund the remaining $20 to the customer. The amount applied to
the utility bill is recognized as income and subject to tax. The remaining $20
is presumed to be abandoned property if not claimed under A.R.S. Title 44,
Chapter 3. The amount presumed to be abandoned property shall be reported and
delivered to the Department as unclaimed property under A.R.S. Title 44,
Chapter 3. The amount delivered to the Department as unclaimed property is not
recognized as income by the utility and is not subject to tax.
Notes
Ariz. Admin. Code §
R15-5-2110
Amended effective
October 17, 1997 (Supp. 97-4).
