Texas Predominant Use Study and Exemption Certification
What is a Predominant Use Study?
A predominant use study is a survey of your company's electrical usage. As a result of the study, if at least 51% of your company's energy usage is determinded to fall under a tax exemption, then 100% of your energy usage is tax exempt. This mean that your electricity company can no longer charge you sales tax (Texas sales and use tax vary from 6.25% to 8.25%). Also, substantial sales tax refunds (up to 4 years retroactive) are available to the customer upon completion of the study.
What is the benefit of having a Predominant Use Study?
It allows you to save 6.25% to 8.25% on your company's electric & natural gas bills (each month).
What type of business may benefiet from conducting a Predominant Use Study?
Texas Manufacturing, Fabrication, Assembly and/or Processing, and Production Facilities, Food & Beverage Processors, Agricultural, Horticultural & Feedlot Operations, Oil & Gas Operations, Golf Courses, RV Parks, and Apartment Properties are a few.
Some specific examples are: print shops, wood, clay & plastic products, pharmaceutical, medical device, electronics & semi-conductor plants, machine shops, chemical plants & refineries, steel and textile operations, audio & video recording production, and a vast array of other manufacturers. Food & Beverage Processors and Bakeries (sub categories of manufacturing)
Nursing Homes, Alzheimer Units, Assisted Living and Retirement Facilities ( residential exemption)
RV and Mobile Home Parks where the average tenant stay exceeds 30 days (residential exemption)
Apartment Complexes & Buildings and Condominiums (residential exemption)
Agricultural and Horticultural operations (including irrigation, feedlots, animal food processing, fruit and vegetable growing & processing, and plant nurseries)
Golf Courses (for electricity used in pumping irrigation water and charging golf carts)
Repairs to railroad "rolling stock", jet aircraft engines, and national defense related "platforms"
Oil & Gas and Mining operations
If you are seeking a price quote for Gonzalez and Arrambide, Inc., to conduct a predominant use study of your facility and have our licensed engineer certify the Texas Sales & Use Tax Exemption Certificate, please contact: Gabe at 956-447-9009 or garaujo(at)gapcpatax.com
with the following information to expedite your proposal:
1. Brief description of your operation (for example, oil refinery)
2. Average monthly electric billing (and natural gas, if gas is to be included in the study)
3. Approximate square feet of your building(s)
4. Location of the facility: city and state
When would a new Predominant Use Study be required?
1) An existing energy tax exempt business is acquired by new ownership, or has been relocated to a new site.
2) During a tax audit, the facility owner cannot produce a copy of the study which originally qualified the facility for energy tax exemptions.
3) An existing tax exempt operation is expanded, and an additional utility meter is installed to service the new area.
Switching to a new energy provider to take advantage of lower energy costs?
The new energy provider will need a copy of your tax exemption certificate to sustain an existing tax exemption. This study can also have additional benefits by quantifying the energy use (in kilowatt hours or cubic feet of gas, and the associated annual cost of each) for each piece of equipment or process in the facility, thereby aiding management in understanding exactly where the major energy costs are being incurred. The study data can form the basis of an "energy audit" to identify targets of opportunity for cost-effective implementation of energy efficiency improvements with a high return on investment.
What is the cost for a Predominant Use Study and exemption certification?
Several factors are used in determining the overal cost of the predominant use study. In some cases, we may be able to conduct the study free of charge.
Why use Gonzalez & Arrambide, Inc. for your Predominant Use Study (tax exemption certification)?
- Our pricing is very competitive anywhere in Texas.
- We have successfully performed many of these studies during the past 14 years.
- Because we us registered engineers that are qualified to perform these utility studies in Texas.
- We will make ourselves available to defend the study should the results be called into question during a tax audit. Having successfully performed many of these studies, we are familiar with the detailed state requirements, and you can rest assured that the study will be performed properly in an ethical manner.
- The Texas Sales & Use Tax Exemption Certification Form will be certified (signed and sealed) by a Texas registered / licensed professional engineer for submittal to your utility provider.
- We carry general & professional liability insurance, workers compensation, & auto liability insurance.
Will you conduct a predominant use study outside of the Rio Grande Valley (RGV)?
- We travel throughout the state of Texas. We often travel to to San Antonio, Houston, Austin, Dallas/Ft. Worth, Corpus Christi, Laredo, Brownsville, McAllen, Amarillo, Lubbock, Galveston, Odessa, Midland and El Paso.
(TAC Title 34, Part 1, Chapter 3, Subchapter O, Rule 3.295) require a predominant use study to qualify a facility for a state and local sales tax exemption on electricity and natural gas billings from the utility provider. For example, in a manufacturing operation, this engineering study determines the % electricity and natural gas consumed directly for manufacturing purposes vs. total usage in the facility. Likewise, in a nursing home or other residential facility, the study will determine the % electricity and gas consumed directly for residential purposes vs. total usage in the facility. Each gas or electric meter at the facility must be studied independently to determine its eligibility for the energy tax exemption. If it can be shown that more than 50% of gas or electricity passing through a particular utility meter is used directly for tax exempt purposes, then the entire usage through that meter is tax exempted. Texas tax codes state that the this study must be certified by a registered (licensed professional) engineer ............". The engineer must perform this detailed study before he can ethically certify the facility's eligibility for the sales tax exemption by signing and stamping his engineering seal on the Texas Sales and Use Tax Exemption Certification form.
To request a cost proposal for a Predominant Use Study and energy Tax Exemption Certificate for your facility, please call us for a free, no obligation quote:
Phone: (956) 447-9009
or email: garaujo(at)gacpatax.com