DATE ISSUED: 07/05/00
CHANGES TO ELECTRICITY AND STEAM EXEMPTION FOR MANUFACTURERS
Registration with the WAGES Program Business Registry Is No Longer Required
Effective July 1, 2000, the 2000 Legislature has eliminated the WAGES Program Business Registry ("WAGES"). Registration with that program will no longer be required for those manufacturing businesses claiming an exemption from sales and use tax on charges for electricity or steam made after that date.
- A business claiming a refund of sales tax on charges made by its electric utility or steam provider prior to July 1, 2000, may not receive a refund for sales tax paid on charges made prior to the date the business registered with WAGES.
- A business claiming a refund of sales tax paid to its electric utility or steam provider on charges made on or after July 1, 2000, may receive a refund regardless of whether that business was registered with WAGES prior to that date.
- Any business that is claiming the exemption from sales tax on purchases of electricity or steam must submit written certification to its electricity or steam provider that it is entitled to the exemption. The certification relieves the seller from the responsibility of collecting tax on exempt charges. The Department will look solely to the purchaser for recovery of the tax if the purchaser is not entitled to the exemption. A suggested format for the certificate is attached. Businesses that have submitted a written certification prior to July 1, 2000, are not required to provide an additional certification form solely because of the elimination of WAGES. Electricity and steam providers may rely on those previously submitted certification forms.
Cigar Manufacturers Eligible for Exemption on Electricity and Steam Purchased July 1, 1998, through June 30, 1999
Effective July 1, 1996, a sales tax exemption on charges for electricity used at fixed locations to manufacture tangible personal property for sale was enacted. The exemption was available to all manufacturers with SIC codes included in Major Industry Group Number 21 (tobacco products). As of July 1, 1998, the exemption was amended to include steam energy and to remove Major Industry Group Number 21 from the list of qualifying SIC activities. SIC Industry Group Number 212 (cigar production) was restored to the list as of July 1, 1999. "SIC" means those classifications contained in the Standard Industrial Classification Manual, 1987, as published by the Office of Management and Budget, Executive Office of the President. From July 1, 1998, through June 30, 1999, therefore, electricity and steam charges incurred by cigar manufacturers were not exempt.
The 2000 Florida Legislature provided that qualified cigar manufacturers that treated electricity and steam charges as exempt during the period July 1, 1998 through June 30, 1999, will not be required to pay tax, interest, or penalty on such charges during that period. Cigar manufacturers that remitted sales or use taxes on electricity and steam charges during that 12-month period may be entitled to refunds.
In addition to the SIC classification restrictions, the following statutory provisions governed the exemption during the period from July 1998 through June 1999:
- Manufacturing plants that used at least 75 percent of the total plant usage of electricity or steam to operate qualifying machinery and equipment received a 100 percent exemption for all charges to the plant.
- Manufacturing plants that used at least 50 percent but less than 75 percent of the total plant usage of electricity or steam to operate qualifying machinery and equipment received a 50 percent exemption for all charges to the plant.
- Manufacturing plants that used less than 50 percent of the total plant usage of electricity or steam to operate qualifying machinery and equipment were not entitled to any exemption.
- Because the exemption is subject to a phase-in limitation, from July 1, 1998, through June 30, 1999, only 60 percent of the qualifying charges for electricity or steam were exempt.
- For periods prior to July 1, 2000, a taxpayer was required to be registered with WAGES. In the event an otherwise qualified taxpayer failed to register with WAGES, the exemption did not apply. No refunds will be allowed for electricity or steam charges made prior to July 1, 2000, unless the taxpayer was registered with WAGES at the time the charges were made.
- The electricity or steam must have been consumed at a fixed location to operate machinery and equipment used to manufacture, process, compound, produce, or prepare for shipment items of tangible personal property for sale, or to operate pollution control equipment, recycling equipment, maintenance equipment, or monitoring or control equipment used in such operations.
The exemption also applies to discretionary sales surtaxes (local option taxes).
Cigar manufacturers who are entitled to a refund of taxes paid on electricity charges billed from July 1, 1998 through June 30, 1999, may obtain the refund through one of the following methods:
- Those who paid sales taxes to their electricity or steam provider may request the refund from that provider. A suggested form of PURCHASER'S EXEMPTION CERTIFICATE CHARGES FOR ELECTRICITY OR STEAM USED TO MANUFACTURE CIGARS FROM JULY 1, 1998, THROUGH JUNE 30, 1999 is attached for this purpose. (The suggested form should be revised, if necessary, to claim exemption for only part of the 12-month period if a manufacturer registered with WAGES subsequent to July 1, 1998.)
- Those who paid sales taxes to their electricity or steam provider may obtain an assignment from the provider of the right to refund of such taxes and apply directly to the Department of Revenue on Form DR-26. Form DR-26 may be obtained by following the directions provided below.
- Those who self-accrued taxes on charges for electricity or steam may take a credit for such taxes against current sales and use tax liabilities or may apply to the Department of Revenue for a refund, using Form DR-26.
Claims for refunds for taxes paid on electricity or steam charges billed during the period July 1, 1998, through June 30, 1999, are subject to statutory time limitations. Cigar manufacturers must file applications with the Department within 60 months of payment of the taxes to the Department if the taxes were remitted to the Department before July 1, 1999. If the taxes were remitted to the Department on or after July 1, 1999, the application must be submitted within 36 months.
FOR MORE INFORMATION
This document is intended to alert you to the requirements contained in Florida laws and administrative rules. It does not by its own effect create rights or require compliance.
For forms and other information, visit our site at www.myflorida.com/dor. Or call Taxpayer Services, Monday through Friday, 8:00 a.m., to 7:00 p.m., ET, at 800-352-3671 (for Florida residents only), or 850-488-6800
Hearing- or speech-impaired persons should call our TDD at 1-800-367-8331 or 850-922-1115.
For a detailed written response to your questions, write the Florida Department of Revenue, Taxpayer Services, 1379 Blountstown Highway, Tallahassee, FL 32304-2716.
To receive a fax copy of a form, call 850-922-3676 from your fax machine telephone.
Ch. 2000-355 L.O.F.
S. 212.08(7)(ii), F.S.