For manufacturers, energy consumption is a major operational cost. However, many businesses may not realize that they could be overpaying sales tax on their utility bills. Utility sales tax exemptions offer a valuable opportunity to significantly reduce expenses, and a predominant use study can help manufacturers qualify for refunds and long-term tax savings.
At Walker Reid Strategies, we specialize in Utility Sales Tax Exemptions, helping high-energy-consumption businesses recover overpaid taxes and optimize their utility costs. Let’s explore how these exemptions work, their benefits, and how your company can take advantage of them.
What is a Utility Sales Tax Exemption?
Utility sales tax exemptions allow businesses to avoid paying sales tax on utilities such as electricity, natural gas, and water when used in qualified activities like manufacturing, agriculture, and industrial production. These exemptions vary by state but can provide significant cost savings.
For a business to qualify, a predominant use study is required to determine the percentage of utility usage allocated to exempt activities. If the usage meets the required threshold (typically 50% or more), the company can eliminate sales tax on future utility bills and claim a refund for taxes paid over the past 3 years.
Why Manufacturers Should Consider a Utility Tax Exemption Study
Manufacturers are among the most eligible industries for utility sales tax exemptions due to their high energy consumption in production processes. The benefits of conducting a predominant use study include:
✅ Immediate Cost Savings – Eliminate sales tax on future utility bills, reducing operating expenses.
✅ Retroactive Refunds – Businesses can recover 50% to 100% of sales tax paid over the last three years.
✅ Compliance & Risk Mitigation – Ensures businesses meet state exemption qualifications and avoid potential audits.
✅ Sustainable Competitive Advantage – Redirect tax savings into production improvements, hiring, or equipment investments.
Case Study: $428,650 in Sales Tax Savings for a Pharmaceutical Manufacturer
Walker Reid Strategies recently completed a predominant use study for a large-scale pharmaceutical company with a 250,000 sq. ft. facility in Southern Florida.
🔹 97% of their energy usage was for qualified activities
🔹 100% refund secured for the past 3 years of sales tax payments
🔹 Total sales tax savings: $428,650
This real-world example highlights the impact of a utility tax exemption study for manufacturers. Even small-to-medium manufacturers can see six-figure tax savings with the right strategy in place.
How Walker Reid Strategies Helps Businesses Save
At Walker Reid Strategies, we make the process seamless and efficient by providing:
1️⃣ Free Initial Assessment – We evaluate your facility’s eligibility for tax exemptions.
2️⃣ On-Site Inspection & Energy Study – Our experts conduct a predominant use study to determine your qualified utility usage.
3️⃣ Full Refund Management – We handle all filings and negotiations to maximize your tax refund.
4️⃣ Ongoing Exemption Support – Ensuring compliance and maintaining future tax savings.
Get Started with Your Utility Tax Exemption Study Today
If your manufacturing facility consumes a significant amount of electricity, gas, or water, you may be overpaying on your utility bills. Don’t leave money on the table!
Walker Reid Strategies has helped businesses recover millions in sales tax refunds and can do the same for you.
🔗 Learn more about utility sales tax exemptions here.
📞 Call us at 800-662-1793 or 📩 Email contact@walkerreidtax.com to schedule your free consultation.
