Every state and local government has the ability to set the standards and qualifications required for a predominant use study. Texas studies can help a qualifying business to reduce their state, city, and county taxes on each specific meter.
Full Exemption from Sales Tax
To quality, the predominant use study in Texas must meet the requirements in the Texas Tax Code, and specifically in Rule 3.295. This includes information on the specific types of businesses that qualify across the state. These businesses and companies include manufacturing, fabrication, power producers, qualifying co-generators, as well as processing companies. In addition, qualifying types of multifamily and residential buildings can also apply.
The predominant use study in Texas will provide the necessary documentation and analysis required to exempt the sales tax for natural gas and electricity at each meter. In Texas, if more than 50% of the gas or electricity use qualifies under the statute, the complete sales tax is exempt on that meter. In other words, if 51% of the use of natural gas or electricity is in a qualified process, the company earns a 100% current and future sales tax exemption.
Unique Texas Requirements
One of the unique factors in completing a predominant use study in the state of Texas is the requirement of an engineer to complete the assessment. The company providing the predominant use study should be aware of this requirement to ensure the results are accepted by the utility companies and the State Comptroller.
If you think your business would benefit from a predominant use study in Texas, call on the experts at B. Riley Financial.