Was a Texas utility's minimum bill taxable when the meter appeared to show zero natural-gas or electricity consumption?

Plain-English summary

The Texas Comptroller said a utility's minimum bill was part of the seller's gross receipts and was presumed taxable even when the meter appeared to show zero consumption.

The utility reported that some consumption was included in each minimum bill. The letter explained that a meter could record consumption too small to be apparent on the face of the device because of its sensitivity or sophistication.

The customer could overcome the taxable presumption only by giving the utility conclusive evidence that no consumption occurred during the billing period.

What this means for you

Utility customers

A zero-looking meter did not by itself prove a no-use billing period under this letter.

Utilities

The minimum bill remained taxable unless the customer established no consumption with conclusive evidence.

Accountants and tax professionals

The source mentions an $8 base charge, but the holding is about the taxable presumption and proof of no use, not the amount.

Common questions

Q: Was a zero-use minimum bill taxable?
A: It was presumed taxable.

Q: Could the customer overcome that presumption?
A: Yes, with conclusive evidence that no consumption occurred.

Q: Why might the meter appear to show zero?
A: The device might record consumption too small to be apparent on its face.

Citations and references

• The letter states that a seller's gross receipts are presumed taxable until the contrary is established but cites no section number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8409L0592D08

Original ruling text

September 25, 1984

Dear **:

Thank you for your recent letter regarding the taxability of a base cost
of service charge of $8.00 made by COMPANY ABC for a period in which you
say no gas was used.

COMPANY ABC has notified us that, based on their data, in each case, some
amount of consumption is included in their minimum bill.

As it is understood, the metering devices will record any consumption of
natural gas or electricity, but depending on the sensitivity or
sophistication of the devices, it may not be apparent on the face of the
device that consumption has occurred.

The statute provides that the gross receipts of a seller are presumed
taxable until the contrary is established. A minimum bill rendered to a
customer, reflecting "zero" consumption, is a part of the gross receipts
of the seller and by law is presumed taxable unless there is conclusive
evidence to the contrary.

Therefore, a minimum bill reflecting zero consumption is a taxable sale
upon which tax is due, unless you can provide the utility with conclusive
evidence that no consumption occurred during the billing period.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You
may write me, call toll free 1-800-252-5555 from anywhere in Texas or
phone 512/475-1931.

Sincerely,

Al Van Allen
Tax Policy Section
Tax Administration Division