Utility Sales Tax
Services

 

In most states, a predominant use study (aka usage study) is required to qualify for a utility sales tax exemption and/or refund.

RicMar has performed thousands of studies across a wide range of industries. We are intimately familiar with the tax code in every state where utility sales tax exemptions exist. In addition, we stand behind our studies and provide ongoing support in the event of a sales tax audit as well as long-term document storage and retrieval at no additional cost.

To minimize risk exposure, a study must be both comprehensive and accurate. RicMar exceeds the state’s requirements by using only licensed engineers to compile and certify our studies. Choosing RicMar to perform your predominant use study ensures the best possible outcome.


What is a Predominant Use Study?

A predominant use study is an engineering report that analyzes your company’s utility usage. The purpose of the study is to estimate the percentage of exempt usage of a particular utility (electricity, natural gas, water, etc). Usage is exempt if it's consumed during a qualifying activity (manufacturing, agriculture, etc).


Why Outsource Your Predominant Use Study?

Creating a accurate study that meets all of the state's reequipments can be difficult and time consuming. Also, most states prefer a study that was performed by a third-party consulting firm. The state agencies feel that a third party is more likely to produce accurate, non-biased results.

 

In most states, exemptions (or reductions) in utility sales tax are available for businesses that meet certain requirements.

RicMar is intimately familiar with the tax code in every state and has secured exemptions for clients that range in size from small firms to Fortune 500 companies. Our clients choose us because of our reputation for delivering the best possible results with minimum disruption to operations.


Who Qualifies for a Utility Sales Tax Exemption?

Typically, the exemptions are use-based. In other words, qualifying for the exemption is based on whether you're using the utility for a statutorily exempt activity. Each state is different, but some common exempt activities are: manufacturing, agriculture and residential.

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Will I Get a 100% Exemption?

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Some states offer a 100% exemption if you can show (via the study) that the utility is consumed predominantly by an exempt activity. In other states, your exempt percentage is directly determined by the study.

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Need More Information?

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Check out the Sales Tax Exemptions by State page.

 

Companies that qualify for an exemption may also qualify for a refund.

RicMar has recovered millions of dollars for clients that span a wide range of industries including manufacturing, agriculture, research & development, food service, residential facilities and many more.


How Do I Apply for a Refund?

Each state has it's own requirements and procedures. Allowing RicMar to guide you through the process ensures that you'll receive the largest possible refund amount and avoid delays in refund processing.


How Much Will My Sales Tax Refund Be?

Several factors will affect your refund amount. Here are the most common:

Statute of Limitations. Each state sets a limit on the number of months of utility sales tax that can be recovered. This ranges from 12 to 48 months, depending on the state.

Exempt Percentage. Some state's offer a 100% exemption if you can demonstrate predominant use. In other states, the exemption is based on the results of the study. In either case, that percentage determines the amount of back taxes you can recover.

Previous Exemptions. If a facility was exempt in the past (e.g. with a previous utility supplier), it could affect how many months of recovery are available.

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Need More Information?

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Check out the Sales Tax Exemptions by State page.