Imposition of tax; rate; adjustment of tariffs

# (a)

A tax is imposed on intrastate telephone commodities and services distributed within this State and on intrastate mobile telecommunications services at the rate of 5.00% of the charges for such services excluding any charges for Internet access as defined in § 5501(6) of this title.

# (b)

# (1)

Except as provided in subsection (a) or paragraph (b)(2), (3) or (4) of this section, a tax is imposed upon any distributor of public utilities, which tax shall be at the rate of 4.25% of the gross receipts or tariff charges received by the distributor for such public utilities. In addition thereto, any municipality with a population greater than 50,000 may impose, by duly enacted ordinance, a local franchise tax of no greater than 2.00% of the gross receipts received by the distributor from the amount of natural gas distributed to residences and businesses located within the boundaries of the municipality. The proceeds of any taxes imposed by such municipality pursuant to its authority set forth in this subsection shall be remitted to that municipality.

# (2)

A tax is imposed upon any distributor of electricity and gas commodities or services to business locations used primarily for the manufacture (as “manufacturing” is defined in § 2701 of this title and shall not include scientific, agricultural or industrial research, development or testing) of goods within this State; for food processing (as food processing is described in § 2903 of this title), agribusiness processing or the hatching of chickens in conjunction with either food processing or agribusiness processing within this State; which tax shall be at the rate of 2.00% of the gross receipts or tariff charges received by the distributor for said commodities or services distributed within this State. For purposes of this paragraph (b)(2), in order for a business location to be “used primarily for the manufacture of goods or food and agribusiness processing within this State,” more than 70% of the employees employed at the business location must be employed in such activity exclusively within this State. Employees employed, by way of example and not limitation, in the management or administrative support of facilities, other than or in addition to a Delaware manufacturing or food or agribusiness processing facility, are not employed exclusively in the manufacture of goods or food and agribusiness processing within this State. For purposes of this subsection, the “business location” means all contiguous real property in which the manufacturer or food or agribusiness processor, as the case may be, has an interest, including a possessory interest. For purposes of this section “agribusiness processing” means any processing, working, development, change, conditioning or reconditioning of raw materials or products into products of a different character, or effecting any combination or composition of materials, the inherent nature of which is changed such that the resulting product is food for consumption by livestock or is fertilizer for agricultural use.

# (3)

Notwithstanding paragraph (b)(1) or (2) of this section, whenever:

a. Gas or electricity is delivered within this State by a transmission company from a person who is not a distributor within this State and such person does not report and remit the tax on such gas or electricity; and

b. A tax would have been imposed under this section had the delivery been made by a distributor,

then the tax imposed by this section shall be upon the use of the gas or electricity and shall be paid by the consumer or user and shall be at the same rate applied to the amount paid for the gas or electricity as if the tax had been computed under paragraph (b)(1) or (2) of this section. Transmission companies shall, in a manner to be prescribed by the Director of Revenue, inform persons to whom they deliver gas or electricity of the tax on the use of gas or electricity. The Director of Revenue may require information returns from transmission companies to include, without limitation, identification of the persons to which gas or electricity is delivered and the dates and quantities delivered. The Director of Revenue shall maintain the confidentiality of prices assessed or paid for gas or electricity.

# (4)

A tax is imposed upon any distributor of direct-to-home satellite commodities and services or cable television communications commodities and services which tax shall be at the rate of 2.125% of the gross receipts or tariff charges received by the distributor for such commodities or services distributed within this State excluding any charges for Internet access as defined in § 5501(6) of this title.

# (c)

When the tax imposed by subsection (b) of this section applies to a distributor subject to the regulation of the Public Service Commission, the Commission is directed, after consultation with such distributor and without a public hearing, to adjust the tariff of such distributor so that the tax is passed through pro rata to the distributor’s customers and the distributor’s earnings are neither increased nor decreased by such tax. The tariff adjustments filed by such distributor and approved by the Public Service Commission shall not incorporate the tax in the charges for commodities and services, and the tax shall appear on the customer’s bill as a separate item. The Public Service Commission is further directed to allow such adjusted tariffs and the rates therein to become effective immediately upon filing without any requirement of 30 days’ notice and without suspension thereof. The Public Service Commission may enter any orders which shall be necessary to permit the tax to be passed through to such distributor’s customer while revised tariffs and billing procedures are being prepared.

# (d)

The tax imposed by subsection (a) and paragraph (b)(4) of this section applies to a “bundled transaction” as follows:

# (1)

The term “bundled transaction” means a transaction consisting of distinct and identifiable commodities or services which are sold for a single nonitemized sales price but which are treated differently for tax purposes.

# (2)

If the sales price is attributable to commodities or services that are taxable and commodities or services that are nontaxable, the portion of the sales price attributable to the nontaxable commodities or services shall be subject to tax unless the provider reasonably identifies and allocates such portion from its books and records kept in the regular course of business.

# (3)

If the sales price is attributable to commodities or services that are taxable at different rates, the total sales price shall be treated as attributable to the commodities or services taxable at the highest rate unless the selling provider reasonably identifies and allocates the portion of the sales price attributable to the commodities or services taxable at a lower rate from its books and records kept in the regular course of business.

# (e)

Nothing herein shall be construed to affect the imposition of tax on a charge for voice or similar service utilizing Internet Protocol or any successor protocol. This section shall not apply to any services that are incidental to Internet access, such as voice-capable e-mail or instant messaging.

# (f)

The State shall transfer in each fiscal year the first $5,000,000 in tax receipts received under this chapter that would otherwise be deposited to the General Fund to the Energy Efficiency Investment Fund maintained by the Department of Natural Resources and Environmental Control pursuant to Chapter 80 of Title 29.