Our goal is to educate future clients on the how to better manage their energy and why it’s important to their day to day operations. Predominant use studies are a great way for companies to start understanding and managing their utility costs. Many predominant use studies result in returned sale tax of thousands of dollars!
A predominant use study is an evaluation of a company’s electrical and/or natural gas consumption. The study analyzes the energy that is, and is not, used for process. It does this by providing a description of all plant equipment, detailing the hours of operation, utilization, and overall energy consumption. And with this study, alongside utility documentation, a company is exempt from sales and use tax.
It would be advantageous for a company to get a predominant use study on a couple of levels. First, it gives the company further understanding of their energy draw by equipment. Secondly, in addition to providing a great summary of a company’s energy management, most state and local governments exempt sales-tax on utility usage for process. Moreover, a qualifying company can retroactively collect past sales-tax expenditures.
Industrial processing companies located in selected states, which can be defined as the activity that converts or changes the form, composition, quality, or character of a good to be sold at retail. In simpler terms, manufacturing companies qualify for utility sales-tax exemption, which includes but are not limited to; agricultural, automotive, bakeries, beverages, breweries, chemical plants, engineered testing, food processing, machine shops, paper mills, printing shops, tool and die, and refineries.
A company receives a utility sales-tax exemption upon submission of a predominant use study completed by a licensed engineered. The engineer studies the company’s electricity consumption at each electric meter, and/or gas consumption at each gas meter, and if the study discloses that over fifty percent of electric and/or natural gas usage is for production, the company receives a percentage-based exemption. Once approved, the company will receive exemption status and recover past sales-tax expenditures.
We have provided predominant use studies for many of our clients. Not only have we saved them hundreds of thousands of dollars, but we have also been able to help them recover incorrectly paid utility sales-tax. Recently we performed predominant use studies across ten Coca-Cola Southwest Beverages locations. Through this process, Coca-Cola was able to claim over $150,000 in sales-tax exemptions! We are licensed in 17 states and have provided predominate use studies in 4 of them. Let us know how we can help you.