Industrial Processing Tax Exemption

Energy, such as natural gas, electricity, and propane, used directly in the manufacturing process is exempt from sales tax. These tax-exempt energy resources that are consumed may be a component of the product being manufactured, used directly to operate certain machinery and equipment, or used for incidental activities such as heating or lighting the facility space in which the industrial processing activities take place.

Anytime a sales tax exemption is claimed for energy used directly in manufacturing, the company (buyer) must have that specific energy usage metered separately or must have a clearly drawn-up plan with the energy provider (seller) to separate the exempt versus the non-exempt energy usage. Claims for the exemption for energy used directly in manufacturing is subject to audit and must be acceptable to the Michigan Department of Treasury. Should there be any problem; the seller is ultimately responsible for the tax.

The claimant generally provides an exemption certificate to the supplier of the utility showing the amount that is exempt. Manufacturing businesses pursuing a sales tax exemption from Bay City Electric should complete Form 3372 and submit to:
City of Bay City
Accounts Receivable Department
301 Washington Avenue
Bay City, MI 48708