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Ezel / Tax Rulings / TX
TX 8903L0926E05 Sales and/or Use Tax (State,Local,MTA) 1989-03-16

Did a customer claiming 100% exempt electricity use need a utility study and engineer certification?

Short answer: No. A specific exemption certificate was enough for exclusive exempt use; studies and engineer certification applied to predominant-use claims.

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This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

A customer claiming that all electricity through a meter was used in exempt manufacturing, processing, fabricating, or other noncommercial activity did not need a utility study because there was no mixed predominant use to measure.

The exemption certificate had to identify the specific use, such as 100% operation of welding equipment. An engineer's certification was required only when the exemption depended on a predominant-use study.

Common questions

Was a study required for 100% exempt use? No.

What did the certificate need to say? The specific exclusive use of the electricity.

When was engineer certification required? For a predominant-use exemption that required a study.

Source

Original ruling text

March 16, 1989

Dear **:

Your letter to Eddie Washington regarding sales tax exemption on electricity
was forwarded to me for response.

A customer claiming sales tax exemption based on 100 percent or exclusive use
in manufacturing, processing, fabricating, or other noncommercial use is not
required to perform a utility study since predominant use does not have to be
determined. The exemption certificate should state the specific use of
electricity, e.g., 100 percent to operate welding equipment.

An engineer's certification is required only for exemptions based on
predominant use where a study is required.

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 toll free
1-800-252-5555. My extension is 3-4666. You may write to Tax Correspondence,
Comptroller of Public Accounts.

Sincerely,

Jo Ann Dieck
Tax Correspondence

March 10, 1989

Mr. Eddie Washington
Comptroller's Office
Austin, Texas 78774

Dear Mr. Washington:

Re: Sales Tax Exemption on Electricity

On occasion an electric customer will submit an exemption certificate
indicating that his electricity purchases are 100% for non-commercial use. For
example, a customer claims that all electricity purchased through a particular
meter is used entirely in a manufacturing, processing or fabricating operation.

It appears in such a situation that under the Texas Tax Code and Sales Tax Rule
3.295 that the customer is not required to perform a utility study and is not
required to submit an engineer's certification with the exemption certificate
furnished the utility.

I shall appreciate your verification of our understanding of this matter.
Please direct your response to my attention and thank you for your assistance.

Sincerely,

Manager Excise Taxes

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