Healthy profit margins are essential to the success of all businesses. Even non-profits and municipalities have a vested interest in protecting essential revenues. For more than 30 years, MuniServices, one of the nation’s leaders in maximizing municipal revenues, has helped client jurisdictions work with local utility providers to ensure the accuracy of utility user tax (UUT) revenues they receive.
Auditing financial data requires a great amount of time and technical knowledge for even seasoned professionals to complete. While coordinating document and data requests from external agencies may multiply this effort, a collaborative approach between local jurisdictions and utility providers is essential to a successful audit. This is also the highest priority for MuniServices when working on behalf of client jurisdictions.
“Utilities are understandably guarded about the information they give out, especially when it involves any financial data,” said Steve Quon, a utility user tax manager for MuniServices. “For many of our clients, we explain that utilities need time to get the information we request. Often, one request could touch a dozen people who collect, review and approve the information we need.”
To help set reasonable expectations, MuniServices recommends that cities and counties consider two guidelines in working with local utilities:
- Understand that utility providers have internal protocols to follow. It’s not unreasonable for them to protect their corporate interests. That means turning over any kind of financially binding documents will take extra time because they need to be reviewed by accounting, operations and legal departments.
- Municipalities need to be open to developing enforcement subpoenas, preliminary notices of determination or preliminary tax assessments as viable options in order to receive needed information. Often, we prepare preliminary tax projections based on available information. This also serves as an impetus for the utility provider to more thoroughly review the amount of UUT they owe, and prove what they owe is correct.
“The preliminaries act as a motivator for the utility to respond,” said Quon. “If they don’t, they would have to pay whatever the assessment states. The utility provider may see the preliminary tax assessment as overvalued which incentivizes them to communicate and work with our team. It becomes a higher priority to them.”
According to Quon, working with utility providers is always professional but requires continual two-way communications to minimize ambiguity and resolve issues as they arise.
“It always comes down to doing your due diligence to analyze and figure out if the utility provider is accurate in their reporting,” said Quon. “If we think they aren’t, then we have a set of tools to move the audit process along. But we always give them a reasonable amount of time to get it right.”
