Q&A with the Pennsylvania Department of Revenue

Does the DOR treat the sale of electricity as the sale of tangible personal property, intangible personal property, or as a service for CNI Tax and CS/FF Tax purposes?

Jun 30, 2011
For purposes of the capital stock franchise tax manufacturing exemption, the Commonwealth Court in The Potomac Edison Company v. Commonwealth, 50 Commw. CT. 1 (1980), held that making electricity was not manufacturing. For purposes of sourcing sales for apportionment purposes, it is the Department’s position that the sale of electricity more closely resembles the sale of a saleable commodity, than it does a service, and the use of the intangible provisions of 72 P.S. §7401(a)(17) is inappropriate.

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These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.