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.
Exemption Requirement
Furnish the utility provider with a properly completed form ST-8, South Carolina Exemption Certificate specifying the qualifying use of the utilities. For refunds, the utility sales tax refund claims must 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.