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