Judge awards electricity tax refunds

July 03, 1991|By Kim Clark

In a ruling that business executives and lawyers said yesterday could spark a wave of business tax refund applications around the state, a Baltimore County Circuit judge has ruled that the county illegally overcollected electricity taxes for years.

Though the disputed collections make up only a small portion of the approximately $14 million the county government takes in annually from the industrial electricity tax, those involved in the battle expected the legal fight over the collection to continue to appeals courts.

"The county has to fight to the bitter end, because if we win every corporation in Baltimore County is going to go after a refund," said Ervin Gazy, a plant engineer at one of the refund winners, the House of Seagram liquor plant in Relay.

The savings will cut the Seagram plant's $200,000-a-year electricity cost by tens of thousands of dollars, he said.

Upholding a Maryland Tax Court ruling last week, Judge Robert E. Cahill found that the county illegally collected almost $1 million in taxes from five companies from 1986 through 1988.

While the county can tax the portion of Baltimore Gas and Electric

Co. bills that charge for the amount of electricity used, it should refund the portion of a 7.5 percent industrial energy tax that is collected on other charges, the judge said.

In addition to charges per kilowatt-hour, BG&E bills include "demand" fees for big users and charges for hookups.

But because the county government is suffering from the recent recession, Judge Cahill said he would allow the county to delay repayments so it could budget for the outlay.

Stanley Shapiro, the deputy county attorney handling the case, declined to comment on the ruling.

But in a previous interview, Jim Gibson, the county's director of finance, said that the loss of any portion of the electricity tax, which makes up 2 percent of the county's overall tax collection, "would be a serious matter."

Robert Bair, attorney for the five companies, said that he has filed for additional refunds for his clients -- A. M. G. Resources, Blue Circle Atlantic, Eastern Stainless Steel, Genstar and House of Seagram -- for 1989 through 1991 and that the total refund is likely to reach $1.5 million.

Other Baltimore County companies are starting to file for refunds, he said, and the ruling may also spark companies to file for similar refunds from Baltimore and Anne Arundel County.

Ottavio M. Grande, assistant tax collector for the city, said yesterday that the city has a law similar to Baltimore County's. But he said he knows of no companies that have filed for a refund.

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