McGuire Sponsel Blog

McGuire Sponsel would like to remind clients about our strategic partner, Energy Impact. The firm helps businesses in 30 states uncover sales tax exemptions on utilities used in the manufacturing or production process. In order to determine the precise amount of energy being used, production versus non-production usage is separated on all eligible utility meters.

Since the key requirement is that a business must use utilities in the manufacturing or production process, a common question is, “What is considered manufacturing or production?” Some examples that qualify include: manufacturing, fabrication, remanufacturing, blending, prefabrication, recycling, R&D, processing, mining and food preparation (select states). Energy Impact offers a free consultation to determine whether a business qualifies for the exemption.

To obtain utility sales tax exemptions, Energy Impact performs the required on-site engineering study on all applicable electric, gas and water utility meters integral to the manufacturing process. The study produces an immediate and permanent savings on utility bills each month. Depending on the size of the utility bills, this can be a considerable amount of savings for a business. Additionally, retroactive studies can be conducted in order to recover utility sales taxes paid for the past 36 months on the meter.

Let’s look at an example.  Energy Impact was engaged to perform a utility sales tax study for a large, Midwestern food production facility. The company operated three, eight-hour shifts per day, six days per week out of their 250,000 square foot facility. The monthly utility spend was:  electricity $80,000, gas $20,000, and water $8,000. The sales tax rate in the state in which the client operated was 7 percent.

All three utilities were being used in the manufacturing process. Energy Impact performed detailed engineering studies on each utility meter at the facility in order to separate out the production versus non-production consumption of energy. A portion of this noninvasive study took four hours on-site, while the remaining calculations and engineering analysis was completed from Energy Impact’s office.

Energy Impact’s engineering study determined that the client’s electric, gas, and water meters were permanently exempt from paying sales tax moving forward. With $108,000 in monthly utility spend at a 7 percent full exemption; the client saved $7,560 per month or over $90,000 per year. Furthermore, Energy Impact performed retroactive studies on three prior years to retrieve over $270,000 in sales tax refunds paid on those meters.

Energy Impact is cognizant of clients’ time and minimizes interruptions during studies. Handling the entire process, Energy Impact collaborates with utility providers to review and understand past billings, file all applicable state documentation on clients’ behalf, and answer any questions that may arise. As a results oriented company, Energy Impact expects to secure significant lifetime savings for clients.  Contact Energy Impact today to learn more.

TJ Sponsel

TJ Sponsel

As the Managing Director of McGuire Sponsel, TJ Sponsel has diversified the firm’s practice lines and thereby increased the potential opportunities for CPA firms and their clients. His approach to client service includes partnering with clients to produce consistent results so that firms can confidently integrate McGuire Sponsel into their strategic tax planning. View TJ's bio.

More Posts