Certain types of energy used directly in processing/agriculture qualify for an Iowa sales tax exemption. In order to claim a sales tax refund, you can submit The IA 843 Claim for Refund annually to obtain a refund of tax already paid on these exempt purchases. Alternatively, and more efficiently, you can choose to claim a sales tax exemption at the time of purchase and eliminate the need to file a claim for refund later. The Iowa Department of Revenue urges you to explore the exemption certificate option. Please feel free to contact us with any questions.
To claim exemption at the time of purchase, simply complete the Iowa Sales Tax Exemption Certificate for Energy Used in Processing/Agriculture (Form 31-113) and give it to your supplier. You will need to supply your utility company with an updated form and documentation showing how the energy is used at least every three years.
When filling out the exemption certificate for your utility company, you will need to show what percent of your total energy consumption is for exempt purposes. Ideally, you would have separate meters for production and non-production use in order to determine the exempt and nonexempt energy percentages. If it is not practical or you do not have production and non-production uses metered separately, you will need to determine the percentage of total energy used for exempt purposes. Form 31-113 can assist you in determining this.
Additional guidance on determining exempt and nonexempt percentages can be found in the following publications: Iowa Sales and Use Tax on Manufacturing and Processing (78-530); Iowa Sales Tax on Food (78-516); Farmers Guide to Iowa Taxes (78-507). Your utility company may also be able to provide assistance, or you may seek the help of an energy consultant.
For further assistance, please contact one of the agribusiness specialists at Bergan Paulsen.
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