Did you know Connecticut exempts manufacturers from taxes on purchases of gas, electricity, and heating fuel that's used directly in the manufacturing of a product to be sold?
This tax exemption can save manufacturers 6.35% on their energy purchases and must be initiated through the completion of a CERT-115 form.
When sales tax exemption occurs, this line item is removed from the electricity or gas invoice.
In addition, manufacturers with SIC codes between 2000-3999 are eligible for a gross receipts tax credit of 8.5% for electricity and 5% for natural gas.
This credit, which must be requested, appears on customer bills as "manufacturer gross earnings tax credit."
CBIA Energy Connections regularly performs audits of member company invoices to ensure all relevant tax exemptions are applied.
"We recently discovered a number of situations where manufacturers were not receiving proper sales and/or gross earnings receipts tax credits," said Tom Guerra, director of operations for Energy Connections.
"In one instance, a large manufacturer in southern Connecticut was not receiving the gross receipts tax credit from their utility on their two largest electricity accounts."
CBIA account manager Bill Walsh contacted the utility, starting an investigation into why the customer was not receiving the credit and requested a retroactive refund for the maximum lookback period.
After repeated attempts by Energy Connections to resolve the issue, it was determined the client was eligible for two years' worth of gross earnings tax credits—totaling over $136,000—to be applied over the next two billing cycles.
The client was elated, Walsh said.
That was not the only large tax recovery by Energy Connections.
"In another situation, we discovered that a mid-sized manufacturer was paying sales tax to both the utility and their third-party supplier for their two electricity accounts," Guerra said.
"We questioned this and brought it to the attention of the client, who was unaware they were unnecessarily paying sales tax due to the manufacturers' sales tax exemption for energy.
"We then advised the customer to complete the appropriate CERT-115 form for each account, which were then submitted to both the utility and the supplier," Guerra said.
In this situation, the customer received $65,000 in sales tax credits.