Utility Exemption Study

Let’s face facts, utility bills can be a crippling burden on any bottom line, regardless of business. In 2017 alone, the U.S. industrial sector, spent just under $68 billion on JUST electricity. But there is something Innovative Property Tax Solutions can do.

Did you know that as many as 30 states allow a sales tax exemption on electricity, natural gas, and/or water? If your business is in the industrial property sector (such as those in the fabricating, manufacturing, or the production industry), hospitality sector, restaurant, agri-business, or nursing care sector, you could benefit from thousands of dollars annually by having a utility exemption study completed by Innovative Property Tax Solutions.

A utility exemption study can help to drastically reduce your overall cost of that utility that is directly associated with your manufacturing processes, patient care, guest hospitality or even farming operations, depending on your business. In most cases, if 50% of the utility is used in the specific process, it can be considered up to 100% exempt. Using manufacturing as an example, equipment such as air compressors used in the manufacturing process, cranes used to convey product through the manufacturing line, motors that run assembly lines, mechanical heating/cooling equipment dedicated to production, and many other examples can all be considered for exemption. Here is an example of a potential exemption benefit:

Let’s say hypothetical company World Wide Widgets is a manufacturing facility located in Indiana, producing widgets. The facility spends about $8,000 per month on electricity bills. Using a 7% sales tax rate, approximately $560 sales tax is paid per month ($6,720 per year).  Our utility study determined their meter qualified for an 100% exemption, as 73% of it is used in the production of their products. The company will save $6,720 per year on state sales tax moving forward.

Innovative’s knowledge and thorough understanding of state and local tax laws and compliance requirements will ensure that your company submits an accurate utility exemption claim that substantiates the highest possible exemption percentage achievable.

If you are unsure as to whether or not your company qualifies, take the time to find out.  Contact us today at 219-472-8682 and we will assist you and your company.


DISCLAIMER: The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, or tax advice or opinion provided by Innovative Property Tax Solutions, Inc.. This material may not be applicable or suitable for the user’s specific circumstance or needs. This information may require consideration of non-tax and other tax factors before contemplating action. If there are specific questions, please contact an Innovative Property Tax Solutions specialist directly or other tax professional before taking action based upon this information. Innovative Property Tax Solutions, Inc. assumes no obligation to inform the user of any changes in tax laws, state specific variations in the law, or other factors that could affect the information contained herein.