State sales tax exemptions

Utility bills may mean lower tax payments

If utilities are consumed in the process of making a product, you may be eligible for a sales tax exemption covering utility costs.

Take advantage of state sales tax exemptions on electricity, natural gas and water when used in manufacturing, processing, fabrication, assembly or providing taxable services. For example, if utilities are consumed in the process of making your product, you may be eligible for a sales tax exemption covering part of the utility costs.

A knowledgeable consultant can help you reduce energy costs on utility bills, increase cash flow or support your utility tax exemption in the event of a state audit. Given a few months of utility bills, they should be able to determine if a utility study may be valuable to you.

Utility study services

A comprehensive utility study engagement should:

  • identify qualifying machinery and equipment according to each state‚Äôs business activity rules;
  • calculate annual utility usage for all production and non-production equipment as required by the state;
  • prepare all forms and documents to request sales tax exemption or refund; and
  • provide audit documentation to support the exempt percentage, including detailed energy consumption schedules and engineer certification letter.

Questions?

Contact Jerry Capps using the information below to learn more about how to optimize exemptions on your monthly utility bills.

Gerald Capps, JD

Senior Vice President
State & Local Tax Services

Jerry Capps and the State and Local Tax (SALT) team provide sophisticated state and local tax planning, strategic advice and advocacy to numerous mid-market, Fortune 100 and industry-leading companies. The team has returned many millions of dollars in one-time and recurring tax savings to companies.

In addition to planning and compliance, the SALT practice includes legislation and policy, litigation, and controversy matters involving income, franchise, sales and use and property taxes. Jerry's work involves critical questions on nexus, apportionment, the Multistate Tax Compact, and the equal protection, due process and commerce clauses of the United States Constitution. He is a respected advocate on issues of tax policy and he represents clients in all phases of state and local tax controversy, including audit assistance and administrative hearings. He also provides counsel on state and local income and transactional costs for mergers, acquisitions and corporate reorganizations.

Jerry is a member of the Institute for Professionals in Taxation, the Kansas Society of Certified Public Accountants, the American Bar Association and the Kansas Bar Association. He has been engaged as a keynote speaker for organizations such as the Institute for Professionals in Taxation, state and local CPA societies, university and professional accounting conferences, and chambers of commerce.

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