Filing for Sales Tax Exemption
Sales tax exemptions are for fuels, including electricity, which are used for agricultural processing and production.
Documentation is the key to receiving this exemption. If having a separate meter for farm use is not practical, a listing of the equipment used for farm production is necessary. We also require that you submit a new certificate if circumstances change or if you determine that the electricity sold has been used or disposed of in a non-exempt manner.
Determine the percentage of your total electrical energy consumed for farm production. The first step is to take your previous 12 months electric billing statements to provide a guide for your total annual used. In the event your previous 12 months were not a typical year for your farm, you can use any 12 month period that is representative. If you do not have your previous history of electric consumption, we can provide this information.
The basic formula for calculating the percentage of electricity used for production is: The sum of electricity used for production divided by the total used, multiplied by 100. It is usually more convenient to calculate the non-production used to find the percentage of sales tax exemption.
As for example, assume your total electric consumption for the year was 55,000 kilowatt hours (kWh). You have calculated your use in kWh for production at 27,000 divided by 55,000 X 100 = 49%, can be used in your application for exemption.
To calculate the amount of electricity used for production, start by making an inventory of all your farmstead equipment. The listing should include for EACH item: