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Power Distribution Lines
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Attachments and Appurtenances
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Distribution lines divide or apportion useable electric current to customers. Distribution lines are subject to property tax. Certain distribution lines are exempt from property tax. The exemptions only apply to the distribution lines and their attachments and appurtenances. The exemptions do not apply to other property such as substations, street lighting, meters, etc.
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Distribution lines may not be subject to property taxes if they are either:
- Located in a rural area and owned by a cooperative association that pays the REA Membership Tax (a tax of $10 per each 100 members, or fraction of)
- Primarily used for supplying electricity for farmers at retail
What qualifies as a rural area?
For purposes of the REA Membership Tax, a rural area is any area that is not included within the boundaries of any statutory city or home rule charter city.
Distribution lines and their attachments and appurtenances.
An attachment is added to the distribution line to make it complete, make up for a deficiency, or strengthen the distribution line.
An appurtenance is incidental, but is necessary for the distribution line to function.
No. Street lighting does not meet the requirements of an attachment or appurtenance.
Report the rural distribution lines on line 67 of section 8 on the Market Value Report for Electric Distribution Lines.
Include:
- A schedule identifying the type of property included in the excludable amount you listed
- Detail identifying that the property is an electric distribution line or an attachment or appurtenance to the distribution line
- If the exemption is for rural distribution lines owned by a cooperative association that pays the REA Membership Tax or for a distribution line used primarily for supplying electricity for farmers at retail
See the Utility and Pipeline Property Record Report Instructions for detailed information on reporting operating property to the department for apportionment.
Does property include street lighting?
Yes. Street lighting is taxable property and you must report it on the Property Record Report.
Use property type description Structure, Owned Land or Structure, Leased Land for street lighting property.
Report exempt electric distribution lines on the Property Record Report by parcel ID, similar to taxable electric distribution lines.
Use Electric Distribution Lines City or Electric Distribution Lines Township for the property type description.
Include the original cost of the exempt property in the Cost of Pollution Control/Specific Exemption column.
Some electric cooperative associations pay $10 per 100 members annually (commonly referred to as the REA Membership Tax) instead of paying property taxes on their electric distribution lines located outside of a city.
For those cooperative associations, information provided on the Property Record Report must both:
- Be aggregated to the unique taxing jurisdiction level
- Exclude information related to property subject to the REA Membership Tax
Unique taxing jurisdiction means the geographic area subject to the same set of local tax rates.
