TRENTON – An Atlantic City casino has lost a battle over sales tax refunds tied to electricity distribution.
The Tax Court has ruled against Atlantic City Showboat Inc., which had sought a refund of approximately $391,000 on more than $622,000 in sales taxes it had paid.
During that time, the casino purchased power from Pepco Energy Services Inc.
The electricity was delivered by Pepco to a distribution system owned by Atlantic City Electric Co.
The court ruled today that such electricity delivered through a local infrastructure is subject to sales tax.
In addition, the court ruled that charges assessed by utilities to recover expenses are allowable.
The arguments followed from the state’s energy competition act that allows a customer to either purchase energy from the local utility or pursue it in the marketplace.
While Atlantic City Electric did not charge the casino for generation and transmission of electricity, it did charge for some other services: societal benefit charges, system control charges, and more.
The court rejected the casino’s argument that electricity distribution is not a “utility service’’ under the statute.