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Miscellaneous Gross Receipts Tax Frequently Asked Questions
What is the miscellaneous gross receipts tax (MGRT)?
It's a tax that a utility company, including a retail electric provider (REP), must pay if it is doing business within an incorporated city or town having a population greater than 1,000, according to the last federal census.
What is a utility company?
For the purpose of the MGRT, a utility company is a person who:
- owns or operates a gas or water works, or water plant used for local sale and distribution located within an incorporated city or town in Texas;
- owns or operates an electric light or electric power works, or light plant used for local sale and distribution located within an incorporated city or town in Texas; or
- is an REP who sells electric energy to retail customers in Texas, but who may not own or operate generation assets.
How does a utility company report and pay the MGRT?
A utility company should complete and submit Form AP-110, Texas Application for Gross Receipts Tax Permit (PDF).
When is the tax report due?
Tax reports and payments are due January 31, April 30, July 31, and October 31 based on gross receipts from business done during the preceding quarter.
If the due date falls on a Saturday, Sunday or legal holiday, the next business date is the due date.
How is the MGRT tax due calculated?
The tax is computed by multiplying the tax rate by the utility company's gross receipts from business done in an incorporated city or town in Texas.
| For business done in cities with a population … | The rate is … |
|---|---|
| more than 1,000 but less than 2,500 | 0.581 percent (.00581) |
| 2,500 or more but less than 10,000 | 1.07 percent (.0107) |
| 10,000 or more | 1.997 percent (.01997) |
When a utility company begins business on or after the beginning of a quarter, then in lieu of the gross receipts tax, the tax due for that quarter is $50.00. This tax payment is to be made in advance of business operations. Use Form 20-100, Gross Receipts Tax Report (PDF).
If a utility company pays the MGRT, does the company also owe the public utility gross receipts assessment (PUCA)? Who pays the PUCA?
Yes, but only if the public utility is an electric utility company, including an REP or an electric cooperative within the jurisdiction of the Public Utility Commission; all electric cooperatives must pay the PUCA whether or not they participate in customer choice. Telecommunication utilities also pay the PUCA, but gas utilities do not.
If utilities pay the MGRT, why is there a charge for gross receipts tax on a customer's bill?
Some utility companies itemize the gross receipts tax on the invoice they send to their customers. If a utility company chooses to separately charge its customers to recoup the gross receipts tax that the company actually pays, it must include the amount collected from customers as additional gross receipts. The utility company then pays tax on the total gross receipts, which includes the reimbursement.
Does the MGRT apply to gross receipts from customers located in a city that was not incorporated at the time of the last census?
No. The most recent federal census is used to confirm whether a city or town was incorporated during the quarter covered by the MGRT report. If a city or town was not incorporated at the time of the last official census, the MGRT is not due.
For example, assume a city incorporated in 2011. The last official census was performed in 2010, and so a utility company would not owe tax on gross receipts from business done in that city until the next federal census.
Using the example above, assume the city will be incorporated according to the 2020 census. The company will not owe the MGRT on the gross receipts from service provided within that city until the third quarter of 2021.
Does the MGRT apply to utilities owned and operated by electric cooperatives?
No, electric cooperatives are exempt from this tax; however, cooperatives that elect to enter the competitive market must pay the tax.