North Carolina Utility Sales Tax Exemption
North Carolina provides a full sales and use tax exemption on electricity, piped natural gas, and water purchased by manufacturers or industrial processors when used on-site in manufacturing operations at a facility. This exemption is authorized under G.S. § 105‑164.13(57). To qualify, the facility must be primarily used for manufacturing, and utility consumption used solely for comfort heating or non-production uses does not qualify.
Utility Study Requirement
North Carolina does not mandate a formal utility study. However, businesses should maintain documentation supporting that the utility is consumed in connection with manufacturing activities—such as production equipment lists, operational layouts, and utility invoicing—to validate the exemption in case of audit.
Filing Requirements
To claim the exemption, businesses should provide North Carolina Form E‑595E (Streamlined Sales and Use Tax Agreement Certificate of Exemption) to their utility provider. This certificate allows the utility to stop charging sales tax on qualifying utility usage going forward. If sales tax was previously paid on eligible usage before submitting the certificate, businesses may request a refund for up to three years, typically by filing Form E‑588 (Claim for Refund) with the North Carolina Department of Revenue via their utility provider. Maintaining detailed records—including exemption certificates and utility billing—is essential to support exemption claims and refund requests.