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TIP# 98(A)1-10
Date issued: 6/26/98

Changes in Electricity and Steam Exemption for Manufacturers
Take Effect July 1, 1998

Since July 1, 1996, charges for electricity used at a fixed location directly and exclusively to operate machinery and equipment that is used to manufacture, process, compound, or produce items of tangible personal property for sale, or to operate pollution control equipment, recycling equipment, maintenance equipment, or monitoring or control equipment used in such operations, have been exempt from the sales tax, subject to the following limitations and conditions:

  • To qualify, a taxpayer must be registered with Work and Gain Economic Self-sufficiency (WAGES) Program.  (For WAGES Program Business Registry information, contact the Florida Department of Labor and Employment Security at 800-342-3450.)
  • A taxpayer's SIC Code must be within the following major industry group numbers:  10, 12, 13, 14, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, and 39.  ( SIC  means those classifications contained in the Standard Industrial Classification Manual, 1987, as published by the Office of Management and Budget, Executive Office of the President.)
  • Unless electricity used for exempt purposes is separately metered, only 50% of the charge for electricity is considered to be used for exempt purposes.
  • The exemption is being phased in at 20% per year.  Beginning on July 1, 1996, 20% of the qualifying electricity charges were exempt.  The exemption increased to 40% beginning on July 1, 1997, and will increase to 60% beginning on July 1, 1998, 80% beginning on July 1, 1999, and finally to 100% on July 1, 2000.
  • Taxpayers may claim the exemption by providing their electricity provider with a written certification of entitlement to the statutory exemption.  The certification relieves the seller from the responsibility of collecting tax on exempt amounts.  The Department looks solely to the purchaser for recovery of tax if the purchaser was not entitled to the exemption.

Effective July 1, 1998, the statute granting the exemption has been amended.  Charges billed on or after that date will be subject to the amended law.  Changes to the exemption include:

  • Taxpayers with SIC codes in major industry group 21 (Tobacco Products) no longer qualify for exemption.
  • The exemption now also includes steam energy.
  • Machinery used to prepare tangible personal property for shipment is added to the types of qualifying machinery.
  • Separate metering of electricity used to operate qualifying machinery and equipment is no longer necessary to claim the maximum exemption.  If a taxpayer uses at least 75 percent of the electricity at a facility for exempt uses, electricity for the facility is 100 percent exempt, regardless of how it is metered.  If exempt usage of electricity at a facility is at least 50 percent but less than 75 percent of total usage, electricity for the facility is 50 percent exempt, whether or not there is separate metering.   If exempt usage of electricity at a facility is less than 50 percent of total usage, no exemption will be available for charges on or after July 1, 1998, even if manufacturing machinery and equipment at the facility is separately metered.  Separate metering can be used to establish that a facility meets the 50% or 75% exemption threshold.  However, for audit purposes, a taxpayer may establish the percentage by providing any satisfactory documentation, such as engineering reports.
  • A new certification must be used by all taxpayers claiming the exemption on or after July 1, 1998, to reflect the changes in the statute.  Suggested formats for certification regarding electricity and steam are attached.

The WAGES registration requirement and the phase-in of the exemption remain in effect.

Download (pdf) Suggested Purchaser's Exemption Certificate ELECTRICITY Used to Manufacture Items for Sale On or After July 1, 1998

Download (pdf) Suggested Purchaser's Exemption Certificate STEAM Used to Manufacture Items for Sale On or After July 1, 1998

s.212.08(7)(ii), F.S., (1997)
Ch. 98-318, L.O.F. (1998)

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