Maximize Your Commercial Building Tax Benefits
Certain businesses may qualify for a sales and use tax exemption on electricity, natural gas, and other utilities used predominantly in manufacturing or related activities. However, many eligible businesses continue paying sales tax because they have not completed the study required to support the exemption.
A Predominant Use Study evaluates how utilities are used within your facility and identifies sales and use tax that may have been paid on exempt utility consumption.
The study may help your business recover taxes paid in prior years while reducing utility expenses moving forward.
Not sure whether your business qualifies? Schedule a free consultation with Walz Group to discuss your operations and potential savings.
A Predominant Use Study can provide both immediate and long-term financial benefits.
Recovering several years of sales and use tax paid on qualifying utilities may provide an immediate cash-flow benefit without disrupting your operations.
A utility tax exemption can lower ongoing electricity and natural gas expenses, creating recurring savings for your business.
As part of the process, relevant utility invoices, exemption certificates, vendor records, and internal coding may be reviewed and coordinated. This helps establish a more reliable process for applying the exemption correctly moving forward.
Engineering professionals guide you through the study, helping evaluate your utility usage and prepare the documentation needed to support the exemption.
Predominant use exemptions are available in many states, but the rules and eligible industries vary. Every business should be evaluated based on its operations, utility consumption, location, and applicable state legislation.
Businesses that may benefit include:
Even when only part of a facility is used for qualifying activities, a study may help determine whether the overall utility usage meets the state’s predominant-use requirements.
If you have not done the study previously, the sooner you evaluate your eligibility, the sooner you may be able to recover prior tax payments and reduce sales tax on future utility bills.
Waiting may also cause older refund periods to expire under the applicable statute of limitations.
Some states require a new or updated study after significant operational changes, including:
Certain states may require businesses to update their Predominant Use Study periodically, even when their operations have not significantly changed.
Walz Group can help review your circumstances and develop a plan based on the requirements that apply to your business.
Consider a Pennsylvania manufacturing facility with approximately 150,000 square feet of operating space.
The facility spends:
At a 6% sales tax rate, the business pays approximately $120,000 in sales tax on utilities each year.
After completing a qualifying Predominant Use Study, the facility could potentially receive:
Actual savings depend on the business’s utility usage, qualifying activities, refund period, and applicable state requirements. This example is illustrative and does not guarantee results.
Walz Group helps businesses look beyond routine tax compliance to identify opportunities that may improve cash flow and strengthen long-term financial performance.
We coordinate the tax and engineering components of the Predominant Use Study process, helping your business:
Our goal is to make the process clear and manageable while helping you take advantage of the sales and use tax benefits available to your business.
