Many states have a sales tax exemption for businesses that use gas, water, and electricity for the express purpose of production or manufacturing. If your company has been paying taxes on these utilities, not only is there the possibility that you can receive an exemption on a percentage of future sales tax, but you may be entitled to a full or partial refund of previous sales tax paid on utilities.

Understanding the law on utility sales tax exemptions in Indiana can have a huge impact on your operating costs. Sales and use taxes apply to retail purchases and Indiana law specifies that utilities purchased for use in production, manufacturing, agriculture, and several other specific types of businesses, are not retail purchases and thus exempt from the sales tax. In order for your gas, electric, and other utility purchases to be exempt from sales tax, it needs to be purchased from a public utility or power company and either metered separately from your other utility use or otherwise separated from your non-exempted utility use.

The law in Indiana provides for only public utilities to be exempted for production, manufacturing, and other appropriate use, so for example, propane, gasoline, coal, etc., are not exempted from sales tax and still qualify as retail purchases. Examples of utilities that are exempted from sales tax include electricity, gas, water, and steam.

Not sure if your company’s utility use is exempt from sales tax? If the utility use is specific to the product your company produces, it is exempt. On the other hand, if the utility use is for the comfort of the employees, it is not exempt.  For example, keeping a room at a specific humidity level because otherwise the product would fail would be utility use that might qualify as exempt. Determining what utility use is exempt and what is not is complicated and the help of a professional might be necessary in your application process.

Determining and proving the percentage of utility use that qualifies for the sales tax exemption is the burden of the tax payer. You will need appropriate documentation to prove the percentage of utilities used for the production or manufacturing in your business and fill out the necessary paperwork required for the exemption to be approved. This process can take anywhere from several weeks up to several months to complete.

The complex nature of determining your company’s sales tax exemption often requires the use of a law firm that specializes in sales tax exemptions as an appropriate expenditure. Companies that specialize in areas like this can analyze all necessary data and determine your percentage of exemption for you. Often they will fill out the necessary paperwork and file the application for you as well.

Hiring a company to assist in filing your sales tax exemption for you is also worth the cost because they can help determine if you qualify for a full or partial refund of taxes already paid. There is a limit on how far back you can receive a refund on your utility sales tax, but any amount refunded can be a huge help in your company’s financial accounts. Additionally, having the proper sales tax exemptions set up will potentially save your company a significant amount of money over the years.

Understanding the law regarding utility sales tax exemption in Indiana is important to saving you the most money and you may wish for an updated study to validate that you are still receiving the greatest exemption possible. Many of the companies that will help you set up your exemptions will also audit your utility usage and ensure that you are utilizing this law to the greatest extent.

If you own a business, then you know about the nightmare that is paying taxes. You’re paying everything from income tax, to self-employment tax, to employment tax, to sales tax, to utility sales tax, and more. Most of those taxes must be paid and cannot be exempt in any way, except for the utility sales tax in certain states. To have a tax be exempt means you either get to pay a reduction of what you normally would, or you don’t have to pay it at all. This is great news for anyone who owns a business or is thinking about owning a business in Indiana, because all you have to do is fill out a form and get an exemption for those taxes, and there are places that can do it for you.

Filing taxes can be a complicated and time-consuming thing for someone who already knows how to do taxes. For those who don’t know how, the job would not be impossible, but extremely difficult. People take courses on how to do taxes, and it is not something you can learn to do overnight. Thankfully, there are companies whose job it is to do other people’s taxes, whether that be for an individual or for a business. When you own a business, you already have a lot on your plate. While you do have people working and doing different tasks for you, everything will eventually fall on you. Something that doesn’t have to fall on you is doing the taxes for your entire company, which is why it is important to find a company that specializes in business taxes. A service like this can help you with all of your tax needs, including sales and usage, real property, personal property, and utility. Not only can they help you do these taxes, but they can help you get an exemption for some of them. If you have a company in Indiana, they can help you get an exemption on utility taxes, because their job and their aim is to save your company money. 

Utility sales tax exemption in Indiana is a wonderful thing. If you don’t already know, when you have a business that uses utilities of any kind when it comes to manufacturing, you’re being taxed. That means that if at any point you use electricity, heat, water, fuel, gas, etc., you’re going to have to pay a tax for it. Unfortunately, it is impossible to not use any of these utilities, which is just one more thing to worry about paying for. If you’re trying to get your business off the ground, you might not even have the money to pay all of these taxes, but if you fill out an exemption form, you can potentially eliminate a lot of them. The process goes like this: someone will examine your form, analyze your utility use, and decide if your company qualifies for the exemption. All of this is a painless process for you, and if you make the cut, then you can save a ton of money and time and put it all towards your business. With everything else that you have to do for your company, it just makes sense to eliminate this potentially troublesome task.

Not all states apply for this exemption, so if you have a business in Indiana, it would be beneficial for you to take advantage of this. Utility sales tax exemption in Indiana should not be passed up if it is an option for you and your company. There are important things to spend your time, energy, and money on, and utility taxes is not one of them.

As a business owner, finding ways to trim the fat from your operating budget is something that seems like a never-ending battle. One of the ways that business owners can keep a little more money in their business is by applying for a utility sales tax exemption in Indiana. If this is a new concept to you, keep reading to learn how this popular exemption can save your company money.

What is the Utility Sales Tax Exemption?

Utility companies not only charge you for the actual amount of energy you use, but you’re also charged a tax. With the utility sales tax exemption, your company may be able to avoid paying the taxes on your gas, electric, or water usage.

What Companies are Eligible for Exemption?

In order to receive the exemption, your company needs to complete Form ST-200. This is form is the Utility Sales Tax Exemption application. Your company must fill out an application for each separate utility. For example, your company uses electricity, water, and steam. Therefore, you must fill out a form for each of these utilities separately. Form ST-200 is not a one-size-fits-all form. With the application, you must also send a copy of a recent bill for the specific utility you’re seeking tax exemption status from.

Are there Special Rules for Non-profit Organizations?

If you are a non-profit organization, you’ll also need to provide information describing the purpose or mission of your organization. You’ll claim your refund by submitting Form GA-110L. On this form, you’ll be required to give an explanation of why you’re due the refund and include documents that support your claim for the refund. The following must be included with the documentary evidence:

• Copies of past bills
• Billing history from the utility company that shows the amount of taxes paid for each period (monthly, quarterly, or annually)
• Copies are acceptable, but must have the company’s letterhead with contact information and clearly visible account information

Documentary evidence and the GA-110L form must be submitted separately for each utility for which you are claiming a refund.

Can Companies Claim Refunds for Past Years?

Unfortunately, the answer is no. If you’ve just discovered this exemption, it is logical that you would want to recoup the sales tax you paid for all the prior years you were charged utility tax but it’s not an option. However, you can claim a refund for sales tax that was collected during the current year and the 3 years prior.

For example, if you’re claiming an exemption for the first time for 2015 utility taxes, you can also submit a request for 2014, 2013, and 2012 utility sales tax. You’ll need a separate form for each year and, again, for each utility.

When Is the Deadline to Submit an Exemption?

The deadline to submit an exception is December 31 of the current year. If you’re claiming the current year as well as the past 3 years, you’ll need to make sure that your forms are postmarked by 11:59 p.m. on December 31st.

Consult with Your Tax Advisor

Lastly, if you have further questions about the exemption process, you’re encouraged to speak directly with your tax advisor. There are many ways that companies, both non-profit and for-profit, can save money on their yearly and quarterly tax requirements. Your tax advisor will be able to go over your personal situation and make recommendations for other filings. He or she will help make sure you’re following the tax laws precisely so you are not at risk for penalties or legal action.

For more information on the utility sales tax exemption in Indiana, you may also want to contact the state’s department of revenue.