Who can qualify in VT for a sales tax exemption on utilities?
A manufacturer or an industrial processor is entitled to 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 VT?
A sales tax exemption certificate must be filed with the utility company. The utility study must be on file to verify the exempt portion of utilities. Utilities used for non-production uses such as office, HVAC, and lighting are not exempt uses. 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 the percentage of production or exemption per the approved utility study.
Does the State require that the exemption certificate and the utility study be completed by a professional utility engineer?
No. There is no requirement that a professional must complete the exemption certificate and the utility study. However most companies in VT use an experienced professional. On Your Mark performs and certifies the utility study. This avoids the utility company coming back on a customer for back sales tax – because of an inaccurate utility study.
What does the utility study entail?
The utility study must include a detailed list identifying every piece of equipment and appliance that uses the utility in production, e.g. electricity. The individual annual KWH consumption must be calculated and included for each piece of equipment. The same thing is to be done for non-production usage. These lists and the associated annual consumption determines the percentage of consumption used for production, and therefore the percentage of exemption.
What is the scope of a professional performing the utility exemption work in VT?
- Accurate completion of the utility study: On Your Mark completes, certifies, and files the utility study. There is no charge for the study and its evaluation until the savings has been approved.
- Claim for refund: In many cases, a utility meter that is exempt will qualify for a refund of past sales tax paid. On Your Mark will file a refund claim for up to the full 36 months covered by the 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: Once On Your Mark is authorized to file on behalf of a client, the exemption work is performed entirely by On Your Mark. There is very little if any time and effort 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 fee by On Your Mark occurs 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 4-7% savings. The exemption is valid for 3 years and may be renewed at expiration.
Start the process now; spend no time and have it completed in 30 days. Contact Mark Winski today!