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Hamilton Southeastern Utilities gets partial Tax Court win

August 7, 2015

The sewer utility serving fast-growing Fishers won a partial victory on its appeal of a tax on connection fees, but the Indiana Tax Court didn’t fully rule in favor of Hamilton Southeastern Utilities.

Builders must pay a system development charge of $2,400 per dwelling added to the system and a $305 connection fee, according to the record in Hamilton Southeastern Utilities, Inc. v. Indiana Department of State Revenue, 49T10-1210-TA-68. Some of that revenue is shared with the city of Fishers, which issues building permits after the fees are collected.

The utility challenged the state’s assessment of utility receipts tax on those fees for the 2006-2008 tax years in an appeal originated in October 2012.

Tax Court Judge Martha Blood Wentworth ruled in the utility’s favor on two of three issues. She held the tax for development charges and connection fees did not apply under I.C. 6-2.3-3-10 governing installation, repair or maintenance, or I.C. 6-2.3-3-11 governing delivery of utility services.

She did let the case proceed, though, leaving a genuine issue of material fact as to whether the utility separated its taxable and nontaxable receipts under I.C. 6-2.3-3-2, which could make the revenue collected from the fees subject to taxation. Further proceedings will be ordered.

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