Buying a business or building or operating a company in the manufacturing, processing, or other qualifying sectors provides the business owner with the opportunity to complete a predominant use study to qualify for utility sales tax exemptions.
In Indiana, the process of the predominant use study is set forth by the Department of Revenue. It includes both government agencies and nonprofit organizations as well as those in the manufacturing and processing industries.
Up to 100% Utility Sales Tax Exemption
Indiana is one of the states that allows a business to claim 100% utility sales tax exemption if more than 50% of the use of the utility is by qualifying equipment, systems, and devices in qualifying processes.
This can be a significant saving for any company. Each meter has a unique predominant use study. Even those meters with less than 50% qualifying use receive a percentage in the reduction of utility taxes from the date of application acceptance forward.
Refund for Past Utility Taxes Paid
Meters with less than 50% qualifying utility use are not eligible for a refund in the state under the program. However, those meters that are above 50% qualifying utility use not only receive 100% utility sales tax exemption but also qualify for a refund from the utility provider.
This refund can look back up to thirty-six months. This provides the company or business with up to three years of utility tax refunds on each qualifying meter. The refund often pays for the predominant use study, with the ongoing savings helping to reduce the cost of operation for the business.
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