Pennsylvania (PA) Tax Exempt

Pennsylvania Tax ExemptWho can qualify in PA for a sales tax exemption on utilities?      
Any company that is a manufacturer  or an  industrial processor can qualify for a PA sales tax exemption on utilities. A company may submit a utility sales tax exemption certificate  for any electricity, natural gas, or water meter that is used  in direct production. Once the valid sales tax exemption certificate is received by the utility co., the company’s purchases are PA sales tax exempt. A utility study is required described below.

How can one obtain the sales tax exemption on utilities in PA?
A company must submit a sales tax exemption certificate,  REV-1220s. The certificate must have completed a valid utility study which depicts the exempt percentage claimed on the exemption certificate. The certificate is good for 5 yrs. and can be renewed. Once approved, sales tax immediately is reduced and the savings is reflected on the utility bill.

Does the State require that a REV-1220s be completed by a professional utility engineer? 
A company may submit a sales tax exemption certificate for utilities used in production. However PA recommends that it be completed by an experienced professional. On Your Mark completes and certifies the utility study so there is no concern of a utility co. coming back on its customers for un-billed sales tax.

What is the ‘predominate usage’ requirement?
A predominate usage study is required in most states however it is not a requirement for a sales tax exemption on utilities in PA. Basically the predominate usage requires that over 50% of any meter’s consumption, be it KWH, ccf’s, or gallons be used for direct production vs. non-production.

However, a utility study is required in PA and is to consist of a list of every pieces of equipment or device using that utility. Each item on the list is to include the annual utility consumption. When the list is separated into the appropriate categories of production use vs. non-production (e.g. lighting, HVAC,  office, etc.), the exempt percentage can be determined.

What is the scope of a Professional performing the utility exemption work in  PA?

  • Accurate completion of the utility study: The utility study is laborious and takes a lot of someone’s time. Most companies choose to avoid this by using a professional.
  • Claim for refund: In PA, exempt utility meters can qualify for a refund for sales tax paid in prior periods to the extent of the 36 month statute of limitations.
  • Does filing of the utility exemption and/or refund claim raise any red flags?  No. This exemption is similar to every exempt purchase for which an exemption certificate is filed with the supplier. The only difference with the utility exemption is that a utility study is required to provide documentation of the production percentage.
  • Entire Process handled from start to finish: On Your Mark performs the entire exemption service with little or no input from the company. Typically On Your Mark has the exemption completed and filed in 30 days from authorization to proceed.
  • Risk less Method to Obtain the Utility Sales Tax Exemption: On Your Mark performs the utility study and evaluation at no charge. If there’s no savings, no fees. The only fees occur when the company receives savings.
  • Benefits of the sales tax exemption on utilities: Typically a 5-8% savings is obtained once the PA sales tax exemption is approved, and the sales tax is immediately reduced or removed from the bill .

Start the process now; spend no time and have it completed in 30 days. Contact Mark Winski today!