The National Association of Water Companies applauded a bill (S. 2942) introduced last week by U.S. Sens. Jeanne Shaheen (D-N.H.) and Lisa Murkowski (R-Alaska) that would amend the Internal Revenue Code of 1986 to provide that certain contributions are treated as non-taxable contributions to capital. The legislation aims to prevent taxation of Contributions in Aid of Construction (CIAC), which are made by customers to regulated water utilities, for the construction or improvement of our nation’s water infrastructure.
The bill would also prevent the taxation of government grants to regulated water utilities, which are often made to assist with environmental remediation efforts. National Association of Water Companies (NAWC) President and CEO Robert F. Powelson issued the following statement in response:
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As a developer am I forced to pay for the installation of new sewer lines, give them to the local public sewer company and pay this capital gain tax of over 21% for my contribution when it is provided for public use?
I’m paying 121% to improve and expand a public requirement if that is the case. That doesn’t seem like the way to expand on a public service. I’m giving the sewer company easements that are equal to the value of the capital gain so why are they taxed at the developers expense? I have to pay it to get the line activated.