Are you paying tax on electricity?(energy alert!)

Mushroom producers and processors should not be paying Pennsylvania sales tax on electricity! Examine your electricity bills now! If you see a charge for "State Sales Tax", then you need to take action. But be sure that you do not confuse the "State Sales Tax" and the "State Tax Surcharge." You must pay the tax surcharge but not the sales tax. In some cases the tax surcharge is negative so then it actually provides a credit to your account.

For a mushroom producer or processor to receive exemption from state sales tax, he or she needs to provide a copy of the Tax Exemption Certificate to the utility company providing electricity. Check with your tax advisor to receive a copy of the certificate or download it from http://www.revenue.state.pa.us/revenue/lib/revenue/rev-1220.pdf along with instructions for completing the form. It should be easy to complete the form. If a mushroom producer has, let's say, a sales room, a business office, or any commercial venture on the same electricity account as the mushroom operation, then the portion of the electricity used for mushroom production/processing needs to be estimated to be listed as the exemption percentage.

When the utility company receives the completed Tax Exemption Certificate, then the company will change their billing records to match the exemption certificate. The company may credit the two most recent amounts of sales tax collected and credit that amount on the next bill issued. Upon request, the company will prepare an affidavit for the mushroom producer or processor showing the amount of sales tax that was paid on this account for the past 36 months. The customer needs to submit the affidavit to the state in order to request a refund.

You are already encountering many expenses in your mushroom production and processing operations. Do not pay any sales tax on your consumption of electricity. But do not subtract the state sales tax from the amount due on your monthly bill. Pay the full amount and then take the required action as discussed above to be relieved of this tax responsibility!

Please provide feedback to Dennis Buffington, dbuffington@psu.edu or Sara Manning, mushroomnews@kennett.net if there are additional topics that would be beneficial as we migrate to this new environment for purchasing and using electricity. Turn to page 22 for the next installment of Energy Alert!

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