Did a taxpayer need to redo a 1986 utility predominant-use study after Texas began requiring engineer certification?

Plain-English summary

The taxpayer had used a 1986 study to claim a sales-tax exemption based on predominant exempt use of natural gas and electricity. The Comptroller said the taxpayer did not have to commission a new study merely because engineer certification became required on August 3, 1987; that requirement applied to studies performed on or after that date.

The taxpayer had to retain the 1986 study for audit. If operational changes affected utility use, the study had to be updated to confirm continued qualification, but the letter said that update did not require an engineer's certification.

Common questions

Did the 1986 study have to be redone? No, not solely because of the later certification requirement.

What records had to be kept? The taxpayer had to keep the 1986 study available for audit review.

When was an update required? When operational changes affected utility usage. The letter said that update did not require engineer certification.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8902L0931G14

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

February 8, 1989

Dear *:

This is to follow up our telephone conversation regarding the
study required for determining predominant use of natural gas
and electricity (utilities).

You stated that a study was performed in 1986 and sales tax
exemption was claimed based on predominant exempt use. You
asked if it is necessary to have another study performed.

The requirement that a utility study be certified by an engi-
neer was effective August 3, 1987, and applies to studies
performed on or after that date. You are not required to
perform a new study because of this requirement.

You must keep the 1986 study in your files for review in the
event of an audit. If there are any changes in the operation
that affect the utility usage, the study must be updated to be
sure that the utility continues to qualify for exemption. The
update would not require an engineer's certification.

This opinion is based on the facts presented. If there are
additional or different facts, the opinion may change.

If you have any questions or need more information, please write
to me or call free 1-800-252-5555, extension 3-4666. The
regular number is 512/463-4666.

Sincerely,
Jo Ann Dieck
Tax Correspondence