Charlie:

Per our conversation earlier today, I outline below the steps to proceed in addressing the following four taxes:  Federal Excise Tax, Pollutant Fee, Florida State Tax and Local Option Fee.  

It is my understanding that Central Oil has paid all four taxes and is currently billing Florida Municipal Power Agency ("FMPA") for the same.  Enron has agreed to reimburse FMPA for all such moneys FMPA pays to Central Oil for the Pollutant Fee.  FMPA will be made whole for the moneys paid to Central Oil related to the Federal Excise Tax, Florida State Tax and the Local Option Fee in the form of a refund from either the IRS or the state of Florida.

Federal Excise Tax
A technical reading related to claims and refunds of Federal Excise Tax on diesel fuel provides that if undyed fuel is sold, tax must be charged.  Only the end user can apply for a credit or refund.  Per a Fort Pierce Utilities Authority ("FPUA") letter I received today which was included in a fax from Karlan White at Central Oil, FMPA would be the party who ultimately will pay the fuel bill for the oil (to expedite payment).  The billing address, however, will be FPUA; such address would show on the invoices.  Ultimately FPUA is the end user of the oil.

Nevertheless, I suggest FMPA actually complete the attached Form 8849 and remit such form to the address noted in the instructions.  FMPA is the party doing the financial transacting with Central Oil (on behalf of FPUA).  At the same time, FMPA should pay the related Federal Excise Taxes to Central Oil since Central Oil has already remitted such moneys to the IRS.

The rationale for FPMA filing Form 8849 and not FPUA is that FMPA is the party making the payment to Central Oil.  Nevertheless, there is a slight chance the IRS will require FPUA to file the Form 8849 itself.  For administrative purposes, though, I suggest FMPA be the party to file.  If the IRS does not accept the filing, we can then resubmit Form 8849 using FPUA as the filing entity.

Pollutant Fee
FMPA agrees to reimburse the Pollutant Fee to Central Oil.

Florida State Tax and Local Option Fee
FMPA must reimburse Central Oil for both the Florida State Tax and the Local Option Fee.  At the same time, FMPA should complete and file the attached Form DR-26, Application for Refund, with the Florida Department of Revenue.  


   

If you have any additional questions or concerns, please do not hesitate to contact me.

Regards,

Justin
______________________
Justin Folloder
Enron Wholesale Services
1400 Smith Street
Houston, Texas  77002-7361

713.853.9260 (Voice)
713.646.4713 (Fax)

CONFIDENTIALITY NOTE:

This e-mail message is for the sole use of the intended recipient(s) and may contain confidential and privileged information.  Any unauthorized review, use, disclosure or distribution of any kind is strictly prohibited.  If you are not the intended recipient, contact the sender via reply e-mail and destroy all copies of the original message.