South Carolina Utility Sales Tax Exemption
South Carolina provides a sales and use tax exemption for electricity and certain fuels used directly in manufacturing, processing, or compounding tangible personal property for sale. To qualify, the utilities must be essential to and used in the actual production process.
Utility Study Requirement
A utility usage study is often used to verify that qualifying utilities meet the direct-use requirement. The study should:
- List all production and non-production equipment consuming the utility.
- Document annual consumption for each item.
- Allocate usage between exempt (production) and non-exempt (non-production) functions.
- Provide clear calculations showing qualifying use.
Filing Requirements
To claim the exemption, businesses must furnish their utility provider with a properly completed South Carolina Exemption Certificate (Form ST-8) specifying the qualifying use of the utilities. If sales tax was paid on qualifying usage, a refund request may be filed with the South Carolina Department of Revenue. Refund claims generally cover taxes paid within the past three years and must be supported with utility bills, the usage study, and the exemption certificate.