Can a Texas-exempt organization buy electricity tax-free and recover tax paid to its utility?

Plain-English summary

An organization with Texas exempt status could buy electricity tax-free when the electricity was used for its exempt purpose. It needed to give the utility a properly completed exemption certificate containing the items required by Rule 3.287.

For sales tax already paid in error, the organization had to request the refund from the utility rather than directly from the State. The written request should include paid invoices showing the tax, date, and purchase amount, and the available refund period was limited to the four years before the request was filed.

Common questions

Did exempt status make every electricity purchase tax-free? No. The letter limited the treatment to electricity used for the organization's exempt purpose and to purchases on or after the exemption's effective date.

Who had to receive the refund request? The utility that collected the tax.

How far back could the refund reach? Four years before the written request's filing date.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8908L0946F01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller August 3, 1989

Dear ***:

Thank you for your letter requesting information on the proper procedure
to
use in requesting a refund of the sales tax your organization paid to the
local electrical utility company.

Organizations which have applied for and been granted exempt status by
the
Texas Comptroller's Office are allowed to purchase tax free items which
relate to their exempt purpose. This applies to purchases on or after
the
effective date of the exempt status. Your organization has had exempt
status
since June 17, 1981.

Electricity which is used for your organization's exempt purpose may be
purchased tax free by providing to the vendor a properly completed
exemption
certificate. The items an exemption certificate must include are
outlined in
Rule 3.287.

A refund of sales tax paid in error must be claimed from the utility to
whom
the tax was paid. Your organization may not obtain a refund directly
from
the State. In order to receive a refund your organization should direct
a
written request to the utility. Copies of the paid invoices indicating
the
tax paid, the date, and the purchase amount should also be included with
the
request. A tax refund is only available for the four-year period prior
to
the filing date of the written refund request.

I have enclosed copies of our rules which discuss exempt organizations
and
the exemption certificate, and our refund procedures to guide you in
obtaining your refund.

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 our
toll-free
number 1-800-252-5555. The regular number is 512/463-4600. You may
write me
at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Sandi Skaggs
Tax Correspondence