Sales taxes may be imposed on water, gas, electricity, telephone services or other sales by telecommunication and utility companies. These entities are often treated as retailers while retaining attributes as industrial processors and/or public agencies. A public agency is generally a state, county, city or other recognized political subdivision. These entities may have limited or full exempt purchasing status granted to them by their taxing jurisdiction. An industrial processor is a manufacturing or mining entity (see our discussion of Manufacturing and Mining on this web site).

Telecommunication and utility companies are frequently given exemptions from sales or use taxes on the machinery and equipment used in producing taxable goods or services. Other machinery and equipment is not usually exempt, unless the entity is exempt as a public agency. States vary on the taxability of purchases and sales made by these companies creating difficulties for their tax administrators.

If you are a Vendor and customer of these entities, you must also exercise care when making sales to or purchases from them to maximize tax savings on your transactions.

Feel free to call or e-mail us to discuss any tax issues you may have.

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