Mississippi Utility Sales Tax Exemption
Mississippi provides a sales tax exemption for utilities such as electricity, natural gas, and water when they are used directly in manufacturing, processing, or other qualifying industrial operations under Miss. Code Ann. § 27-65-101. The exemption applies when utility usage is integral and essential to the production of tangible personal property intended for sale.
Utility Study
To support the exemption, businesses must perform a utility usage analysis that:
- Identifies all equipment and systems consuming the utility
- Distinguishes between production and non-production usage
- Calculates the percentage of utility consumption attributable to manufacturing
- Includes supporting documentation, such as equipment specifications and energy consumption estimates
Accurate allocation is critical, as only the portion of utility usage tied directly to qualifying production is eligible for exemption.
Filing Requirements
To apply for the exemption, businesses must submit a Mississippi Sales and Use Tax Direct Pay Permit or similar exemption certificate to the utility provider. The certificate must clearly state the basis for the exemption and be kept on file with the vendor. If sales tax was paid on qualifying utility usage prior to submitting the exemption certificate, businesses may apply for a refund from the Mississippi Department of Revenue. Refunds are typically available for taxes paid within the last 36 months. Supporting documentation—including utility bills, exemption certificates, and utility studies—should be retained to substantiate the refund claim and ongoing exemption.