Is there a way companies can save thousands of dollars every year? With the help of utility studies, there is a way companies can save annually by simply conducting an expense analysis for resources used in direct manufacturing.
Many states in the U.S. offer significant utility sales tax reductions to companies and manufacturers to encourage business. It’s possible to save exponentially by identifying which manufacturing expenses qualify for these exemptions.
What Is Predominant Use Study
Indiana has set a requirement regarding energy consumption and utility sales tax exemption laws. The main point states: majority of consumed energy utilized for manufacturing purposes (by the company) should facilitate predominant purpose.
Also known as a utility study, this process encompasses exact calculation of predominant resources used during the manufacturing process. This study is usually prepared by an expert, to assure compliance is followed as set by the state government for utility tax exemption.
Qualifications for Utility Tax Reductions Differs From State to State
Twenty-one states including Indiana have passed this law that benefits local companies and manufacturers. Each state requires different qualifications for eligibility yet there are some basic requirements shared.
Will your business benefit from having this study performed in preparation for exemption in Indiana? Types of businesses that will benefit are:
- Most types of manufacturing facilities
- Food producers that utilize gas operated ovens
- Some food and beverage processors
- Agricultural and horticultural companies
- Companies that extract natural resources (from the ground)
- Educational, charitable and religious facilities
- Retirement homes, nursing homes and other such centers
What Is the Predominate Usage Requirement?
More than 50% of a meter’s consumption used for direct production of tangible personal property is acceptable usage requirement set by State of Indiana.
Additionally, the state requires a dominant utility usage study needs to be completed and submitted which is an integral part of ST 200, Schedule E.
The form must include two lists of items and related information:
■ Detailed and accurate list of equipment that was used in production (from a specific meter)
■ Detailed and accurate list of equipment and all items on the meter not used in direct production
As per Indiana utility sales tax exemption law, businesses require their utility study conducted by a professional engineer or consultant. Consult with our experts if you have any questions.