Illinois Utility Sales Tax Exemption
Illinois provides a sales tax exemption on electricity and natural gas when the fuel or utility is used primarily in manufacturing or production activities. To qualify, more than 50% of the utility usage must be consumed directly in manufacturing, assembling, or processing tangible personal property for sale or lease.
Utility Study Requirement
A utility usage study is required to determine the percentage of electricity or natural gas that is used in production. The study must:
- Identify all equipment and processes using the utility.
- Distinguish between qualifying production usage and non-qualifying usage.
- Provide calculations demonstrating that over 50% of the utility is used directly in qualifying production activities.
Filing Requirements
To claim the exemption, businesses must provide a completed Illinois Department of Revenue Utility Exemption Certificate, Form ST-587 to the utility provider. If sales tax refunds are generally available for up to 36 months.