Predominant Use Studies
Stop Paying Taxes On Your Utilities
Natural gas or electricity used during a regular monthly billing period for both exempt and taxable purposes under a single meter is either totally exempt or taxable based upon the predominant use of the natural gas or electricity measured by that meter. A predominant use study is performed to establish what percentage is being used for exempt purposes as defined by the Texas Comptroller.
Additionally, current law allows the taxpayer to apply for a refund of all sales tax paid over the preceding 48 months or since the meter was connected, whichever is less. The study must be completed and on file at the location of the entity claiming the exemption at the time an exemption certificate is submitted to the utility company.
Our team of certified engineers and former Texas tax auditors will analyze annual consumption, compile data, compute percentages, prepare documentation, and certify results. There is no disruption of your daily operations during this process. We complete and submit all necessary documentation to support our studies and, as needed, defend them against the Texas Comptroller's office. If you are paying sales tax on utilities and your competitors are not, they have a competitive advantage!
To Prepare Your Study, We Will Need the Following Documents
- A Signed Engagement Agreement.
- A Utility Company Required, Limited Power of Attorney.
- Copies of the Last 12 Paid Utility Bills for Each Meter.
Energy Efficient Commercial Building Tax Deduction
The 179D Energy Efficient Commercial Buildings Tax Deduction codified as section 179D of the tax code was enacted as part of the Energy Policy Act (“EPAct”) of 2005 to enable building owners and certain designers to claim a deduction for placing energy efficient buildings and renovations into service. Building owners and certain designers can claim the deduction in the year the building or renovation was placed into service. Designers such as architects, engineers, and contractors can claim the deduction for government-owned buildings.
BASICS OF THE DEDUCTION
There are three building systems that are evaluated and modeled to verify that they meet the minimum American Society of Heating, Refrigeration, and Air-Conditioned Engineers (“ASHRAE”) standards, and each system can yield up to $0.60 per square foot, including the following:
• Building Envelope • HVAC and Hot Water Systems • Interior Lighting Systems
Buildings that achieve at least a 50% overall energy efficiency can claim $1.80 per square foot of building space. In the instance where the entire building does not meet at least a 50% overall energy efficiency, each system is modeled independently to determine energy efficiencies within each system calculated at $0.60 per square foot, and the deduction is then computed based on each building system.
Audit Defense Services
A state auditor's main task is to determine if a business has properly collected, reported, and paid state and local taxes. Since 1991, Savant Energy Services, (SES) has represented and defended taxpayers under audit by the Texas Comptroller. SES manages the entire audit lifecycle and interacts with the auditor on your behalf to ensure results are obtained for our clients.
SES has decades of experience dealing with complex taxability issues and audit procedures, including tax account reconciliation, review of supporting documentation, and sampling. SES routinely review samples for errors to ensure a correct sample of the audit period is utilized which improves the accuracy & efficiency of the audit. This expertise assists our clients so that the sample design reflects as nearly as possible, the normal business operation.
SES Audit Defense Services save clients valuable time, resources, and money so they can focus on their core business operation.
BASICS OF THE DEDUCTION
- Development of strategy based on pre-audit & prior audit package
- Interactive communications with clients throughout the audit
- Assurance that tax laws are applied correctly
- Neutralize financial risk from audit
- Comprehensive overpayment review conducted to offset potential deficiency
- Dispute solution support in negotiation of settlement or payment plan
Audit Reduction Services
For almost three years, Savant Energy Services (SES) has successfully navigated our clients through an audit reduction process to significantly reduce exposure, mitigate risk and achieve a more favorable outcome. Since 1991, we have generated millions of dollars in tax savings through our audit reductions services.
SES leverages our combined one hundred years of state and local tax expertise by reviewing our clients Notification of Exam Results to investigate potential errors and discrepancies made during an audit. Our extensive analysis of limited sales, exercise and use tax, including penalty and interest may lead to a disagreement with the exam results and on behalf of our client we will jointly challenge an audit assessment.
An Audit examiner’s main task is to determine if businesses have properly collected, reported, and paid state taxes. Although the audit is a tool to ensure tax compliance many taxpayers experience conflicting results that sometimes yield significant deficiencies.
The notice of tax due is an important document, because it sets the deadline for filing a petition for Redetermination to challenge the audit results administratively.
The initiation of a hearing for written request for Redetermination must include a Statement of Grounds. To be considered, the request for a hearing must be filed within sixty (60) days from the date of the deficiency determination.
TEXAS Administrative CODE
TITLE 34: PUBLIC FINANCE
PART 1: COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3: TAX ADMINISTRATION
SUBCHAPTER O: STATE AND LOCAL SALES AND USE TAXES
R&D TAX CREDIT
Research & Development Tax Credit Background
The R&D Credit allows companies, large and small, to claim a dollar for dollar reduction in tax liability for conducting qualified research within the United States, as identified by examining qualifying research activities and expenditures related to employee wages, outside consulting costs, and certain material expenses. Taxpayers may claim credits back three years and carry forward unused credits for up to 20 years.
Basics of The R&D Credit
When individuals think of research and development, they typically imagine a setting involving test tubes and lab coats. However, when it comes to the tax code, the definition of what may qualify as research and development is more expansive, and includes any work performed that involves design or development to create a new or improved business component.
The following four-part test outlines the requirements necessary for claiming the R&D Credit.
• New or Improved Business • Elimination of Uncertainty
• Process of Experimentation • Technological in Nature
Permanent - In December of 2015, Congress passed the PATH Act that made the R&D credit a permanent part of the tax code. This was a big win for small and medium sized businesses. Companies can now forecast and budget accordingly knowing the credit will be available for years to come.
Payroll Tax - One of the enhancements to the R&D credit was the ability to offset payroll tax for startup companies. Qualified Small Businesses (less than $5 million in gross receipts and with gross receipts of 5 years or less) can use the R&D credits. They have now applied the same rules with businesses in 2016 going forward.
Architecture - Every architecture project is unique and poses design changes, which is why architecture firms typically spend 60-75% of their time during the conceptual/schematic design phases, design development phase, and construction documents phase. Many architecture firms undertake this activity on a daily basis, but fail to take advantage of the R&D Tax Credit.
What may seem as typical day-to-day design challenges during these phases can qualify as R&D related expenditures, including but not limited to, the following:
• Developing conceptual ideas and designs;
• Developing and designing site features and orientations;
• Developing and designing master plans;
• Developing construction documents;
• Computer-aided design and building information modeling activities;
• Developing new or innovative designs to meet LEED certifications or energy-efficient specifications; and
• Collaboration and evaluation between consultants on means and methods for constructibility.
Manufacturing - The manufacturing industry encompasses a variety of companies from machine shops and product engineering firms to medical and technology companies. Not only does manufacturing include the design and development of new or improved products, but also new or improved processes. In addition to claiming the wages of employees involved in the development of manufacturing processes and products, the material costs associated with certain R&D activities may also be captured toward the credit. Other significant costs can include supplies used in the development of prototypes as well as machines used to improve product performance or process efficiencies.