Maine Utility Sales Tax Exemption
Maine provides a partial sales and use tax exemption on electricity, natural gas, and water used at manufacturing or industrial facilities. Under 36 M.R.S. § 1760(9‑D), 95% of the sale price of these utilities is exempt when used in qualifying production activities, with the remaining 5% subject to the standard 5.5% tax rate. In cases of mixed-use, taxable and non-taxable usage must be broken down to the nearest 10%.
Utility Study
A detailed utility usage study is required to substantiate the exemption. The study must:
- List every piece of equipment or appliance (both production and non-production) using the utility
- Document annual consumption for each
- Classify usage by exempt vs. non-exempt functions
Estimate utility usage allocation by square footage where appropriate Failure to calculate or classify usage accurately may result in denial.
Filing Requirements
To claim the utility sales tax exemption in Maine, businesses must provide their utility supplier with an Industrial Users Blanket Sales Tax Certificate of Exemption such as form ST-A-117. This certificate documents the business’s eligibility and authorizes the utility provider to apply the exemption to future bills on qualifying utility usage. Because utilities often serve both exempt production areas and non-exempt operations, businesses are required to conduct a detailed utility usage study to allocate consumption accurately. This study should identify all equipment using the utilities, separate production related use from non-production, and provide supporting calculations to justify the exemption percentage. If sales tax was previously paid on qualifying utility usage, businesses may file a refund claim through the utility provider for up to three years prior. Maintaining thorough records including utility bills, exemption certificates, and usage studies is critical to support exemption claims and refund requests.