Connecticut Utility Sales Tax Exemption
Connecticut offers a sales tax exemption on electricity, natural gas, and heating fuel used directly in the fabrication or manufacturing of finished products for sale. This exemption is intended to reduce the tax burden on manufacturers and help promote industrial growth within the state. To qualify, at least 75% of the utility consumption must be used in manufacturing or fabrication activities that directly contribute to producing tangible goods for sale. The facility where the utilities are used must have separate metering to clearly measure qualifying consumption.
Qualifying Utilities and Activities
The exemption applies specifically to:
- Electricity
- Natural gas
- Heating fuel (such as fuel oil or propane)
These utilities must be used predominantly in manufacturing or fabrication activities. Utilities consumed for general office use, lighting, heating unrelated to production, or other non-manufacturing purposes do not qualify.
Utility Study Requirement
Manufacturers should conduct a usage analysis or study. This study identifies all utility-consuming equipment and allocates the proportion of usage tied to manufacturing processes versus non-qualifying activities. Accurate documentation is important to substantiate the exemption claim in case of audit.
Filing Requirements
To claim the exemption, businesses must submit a completed exemption certificate to their utility provider. The standard form used is Connecticut Form CERT-115, which certifies that the utility usage is eligible for exemption under state law. This form must be fully completed and provided to the utility vendor to prevent the collection of sales tax on qualifying usage. Utilities will then apply the exemption on subsequent bills based on this certification. If sales tax has already been paid on qualifying utility usage, businesses may file for a refund. Refund claims can typically be made for up to 36 months prior to the request date and may be requested either through the utility provider or directly from the Connecticut Department of Revenue Services. Businesses should maintain detailed records and supporting documentation when submitting refund claims.