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Alabama Department of Revenue - Property Tax - Public Utilities

Public Utilities

The Public Utility Section of the Property Tax Division has two primary responsibilities. The first responsibility is to annually discover, collect appraisal data, appraise and allocate, hold informal appraisal hearings, and distribute the taxable property of all public utilities, railroads and airlines in Alabama. This is done in accordance with Title 40-21-1 and subsequent sections of The Code of Alabama. The second responsibility of this section is to assess, bill, collect, and deposit the Freight Line and Equipment Companies License tax as required by Title 40-21-52 of the Code of Alabama.

Our office completes unit appraisals each year on local, national, and international companies having property in all fifty states, Canada, and Mexico. Unitary appraisals are performed on each company using generally accepted fair market appraisal methods. This requires using all three approaches to value, including the market approach, the cost approach and the income approach, if sufficient data for each approach is available. As a part of this unitary appraisal process, the appraised value of fixed real and personal property located in Alabama and other states is apportioned to Alabama based on the gross investment in Alabama divided by the gross investment everywhere. For companies containing mobile property in their unitary appraisal such as railroad cars, locomotives, and aircraft, other factors are added to the allocation process.

Once the state assessed value is determined, it is distributed back to each local Alabama taxing jurisdiction based on these same factors. Once this is completed the utility county assessments have to be totaled and certified to their respective counties in Alabama. The county taxing official then adds the respective state, county and city tax rate to each public utility assessment and sends a tax bill to each utility company.

The public utility section will locate, assess, and bill each private railcar company operating in the state of Alabama for the previous tax year. This is accomplished by contacting every railroad operating in Alabama annually and requiring them to provide our office with a list of all private railcars they pulled through the state for the previous year. Also in January of each year, a freight line return is mailed to all railcar companies taxed during the previous year. From the information filed by each railcar company, an assessment and tax bill is made and sent to each company. The companies have 30 days to remit the tax due.