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EMD-76-7 1 (1976-08-27)

handle is hein.gao/gaobaabhb0001 and id is 1 raw text is: COMPTROLLER GENERAL OF THE UNMTD STATES WASWINGTON. D.C. U054 ~0 #l lql AUG 2 26q q The Honorable Lee Metcalf, Chairman Subcommittee on Reports, Accounting, and Management to 6(UJ c, Committee on Government Operations United States Senate Dear Mr. Chairman: Your October 3, 1975, letter asked us to determine the amount of Federal income taxes paid by class A and B electric utilities, using the tax data they supplied to the Federal Power Commission. In addition, you asked us to explain (1) any differences between the Federal income taxes paid and the Federal income taxes charged as furnished to you by the Com- mission and (2) the open audit system used by the Internal • Revenue Service (IRS) concerning such taxes. In later meetings with your office, we agreed to seek disclosure of the tax data from IRS because we could not determine with any degree of accuracy the amount of tax paid by electric utilities from the data they supplied to the Com- mission. We were also asked to inquire into the open-year audit or any other IRS audit procedures which were peculiar to the electric industry which would be responsible for differences. We agreed that the tax data to be obtained from IRS was the status of accounts which disclosed the tax liability and the tax paid documented by official tax returns for each util- ity company but which would not have complete tax data about subsequent credits, deferrals, and intracorporate adjustments. The Commission tax data given you is derived from tax data that electric utilities filed annually on FPC Form 1. Although form 1 contains an estimate of the electric utili- ties' tax liability based on income and expenses accumulated as of December 31 of any reporting year, such an estimate may reflect information and adjustments to taxes paid in more than one reporting year. This appears to be caused by differences in the Commission and IRS reporting requirements. Over a period of several years, however, the tax data from the form 1 should coincide with taxes paid. (MD-76-7

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