Who can qualify in TN for a sales tax exemption on utilities?
A manufacturer or an industrial processor can qualify for a sales tax exemption on utilities used in production of tangible personal property (a product). A utility study is required which determines the percentage of production and therefore the exempt portion of sales tax paid (on that utility meter).
How can one obtain the sales tax exemption on utilities in TN?
When a meter qualifies for exemption, and the exemption certificate and utility study is provided to the utility company, the account is tagged tax exempt. The sales tax is reduced from the current rate to 1.5%.
Does the State require that the exemption certificate and the utility study be completed by a professional utility engineer?
No. The taxpayer may complete and submit the exemption certificate and the utility study. However most companies in TN use an experienced professional to certify the utility study results. This avoids the utility company coming back to the customer for back sales tax.
What does the utility study entail?
A detailed list must identify every piece of equipment and appliance that uses the utility for production, e.g. electricity. The individual annual KWH consumption must be included for each piece of equipment. The same list is to be created for non-production usage. These lists and the annual consumption is the determinant of the production portion of the meter. It is for that reason, the state requires accuracy and certification of the utility study.
What is the scope of a Professional performing the utility exemption work in TN?
- Accurate completion of the utility study: The utility study is completed, certified, and filed by On Your Mark. There is no charge for the study and its evaluation until the savings has been approved.
- Claim for refund: An exempt utility meter can qualify for a refund of prior sales tax paid up to the full 36 months covered by the statute of limitations. This is included in On Your Mark’s scope of work.
- 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: The exemption work is performed entirely by On Your Mark; very little if any time and effort is required of the client. Typically the exemption is completed and filed in 30 days. On Your Mark handles all filings and all questions and communication from the utility company and the state .
- Risk less Method to Obtain the Utility Sales Tax Exemption: On Your Mark performs the utility study, certification, and refund claim at no charge. If there’s no savings, no fees. The only fees to the client occur after the exemption and refund claims are approved, and the client receives savings.
- Benefits of the sales tax exemption on utilities: Once the sales tax exemption is approved, the client obtains a permanent 5.5% savings and the sales tax is immediately reduced from 7% to 1.5% .
Start the process now; spend no time and have it completed in 30 days. Contact Mark Winski today!