After Rule 3.295 changed, did a utility need replacement electricity-exemption certificates for customers whose certificates had been accepted before the revision?

Plain-English summary

After Rule 3.295 was revised to require exemption certificates to state the specific reason for exemption, a utility asked whether it needed new certificates from customers whose older certificates were already accepted.

The Comptroller said no replacement was required for certificates accepted before the rule revision. Current certificates claiming exemption based on predominant electricity use, however, had to state that a valid and complete study had been performed and had to insert the actual percentage of electricity used to process tangible personal property for sale in the regular course of business.

What this means for you

The letter grandfathered previously accepted certificate forms for this transition but applied the new specificity requirement going forward. A generic predominant-use claim was not enough on a current certificate; it needed the study representation and actual exempt percentage.

Common questions

Did the utility have to replace certificates accepted before the revision? No.

What did current predominant-use certificates need to say? That a valid and complete study showed a stated actual percentage of electricity was used to process tangible personal property for sale in the regular course of business.

Could the certificate omit the actual exempt percentage? No, under the language required by this letter.

Citations and references

• Comptroller Rule 3.295 — electricity exemption-certificate rule whose revision prompted the request.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8704L0816F04

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller April 23, 1987

Dear ***:

Thank you for your letter of April 6, 1987, regarding sales tax exemption
certificates regarding the following:

Due to the recent revision of Sales Tax Rule 3.295 it is now
required that an exemption certificate must be specific as to the
reason for the claimed exemption. If the customers are claiming
that the predominate use of the utility is for processing or
manufacturing then the reason for the exemption must state, "a
valid and complete study has been performed which shows that
(insert the actual exempt percentage) of electricity is for
processing tangible personal property for sale in the regular
course of business."

Question: Is it necessary for **** to secure new
exemption certificates from customers that we have already accepted since the
revision of Rule 3.295 that do not contain this specific language?

Answer: It is not necessary to secure new exemption certificates to
replace
those you accepted prior to the rule revision. Current exemption
certificates must contain the specific language when claiming exemption under
predominant use.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
(Mrs.) Jo Ann Dieck
Tax Policy Section
Tax Administration Division