What is a Predominant Use Study?

A predominant use study is an evaluation of your company’s electric and natural gas consumption that can potentially allow you to receive a state and local sales tax exemption.  Qualifying customers can not only receive future tax exemption status, but can also recover past sales tax expenditures if deemed applicable. If the study reveals that over 50% of your natural gas and/or electric usage qualifies, you can receive this sales tax exemption status.

How It Works

In order to officially qualify for these sales tax exemptions, your company must hire a licensed professional (like us) to complete a Predominant Use Study. A Predominant Use Study is an important part of determining whether or not your company or elements of your business qualify for sales tax exemptions, and even refunds. The reason why you might require a Predominant Use Study is to legally prove to the government that your company complies in required areas.

The Predominant Use Study looks at several energy elements. It determines the kilowatt per hour electricity consumption at each electric meter. The study then investigates all of the electricity used from applicable equipment. This evaluation process separates the equipment into one of two categories: processing or non-processing. The important part comes in understanding and then identifying where those tax sales savings apply. In general, if over 50% of your electric usage qualifies under the above mentioned evaluation, it is possible for your company or business to receive a sales tax exemption status.

Benefits of a Predominant Use Study

There are three main reasons why you should investigate whether or not your company would benefit from having a licensed consultant conduct a Predominant Use Study.

Energy Cost Management & Savings

The major benefit of having a licensed consultant conduct a Predominant Use Study comes down to the savings in tax exemptions that your company can receive. In many cases, you can get a refund in sales tax that includes saving for (and up to) the past 48 months. The result of the study also identifies areas where you spend the most on energy costs. This is done through quantifying the electric or gas usage for all equipment and other areas of major energy consumption. The study then provides several strategies to put into place for further opportunities to save.

Improve Energy Management

While identifying areas of cost savings, the Predominant Use Study also highlights areas where your company can improve energy management processes. For example, if your company uses equipment 24 hours a day, there might be times where you can actually reduce the number of hours and still qualify for sales tax exemption.

Documentation

Having a professional work with your company to complete this study will give you the appropriate documentation you need to continue to receive exemptions or reductions on the utility sales tax you pay. These documents are mandatory in order to legally support your claims.

Fee Structure

Our consulting firm will only charge you a percentage of those savings, or a flat fee. If you don’t qualify for any sales tax reductions or exemptions, and we can not provide any savings to your company, we will not even charge for a basic evaluation.

Who Can Benefit

Many different companies in many different industries can qualify for this exemption status including fabricating and manufacturing: this includes fabrication, processing and assembly from small shops to larger facilities and factories. Some specific examples include:

• semi-conductor plants
• chemical plants
• refineries
• print shops
• video recording production

Other subcategories of manufacturing and industries that can also qualify include:

• Bakery and assembly factories
• Food and beverage processing
• Retirement homes
• Nursing homes (and assisted living facilities)
• Condominium and apartment complexes
• RV and mobile home parks
• Oil and gas operations
• Agricultural and horticultural
• National Defense operations

We do Predominant Use Studies & Sales Tax Exemption Certifications for:

• Texas Manufacturing Facilities
• Food & Beverage Processors
• Agricultural
• Horticultural & Feedlot Operations
• Oil & Gas Operations
• Golf Courses
• Film & Media Production
• Digital TV Towers
• Apartment Properties
• Assisted Living
• Other eligible Texas facilities.