Found an easy win I almost missed. Client is a machine shop in Detroit on DTE Energy. They've been paying sales tax on their entire electric bill for years. Michigan has a manufacturing exemption — energy used directly in the manufacturing process is exempt from sales tax. The shop qualifies. Nobody ever filed the exemption certificate. Annual sales tax on their electric bill: about $4,800. Got the exemption filed and DTE is refunding 3 years — $14,400.
Manufacturing exemption from sales tax — client didn't know it existed
The manufacturing exemption exists in most states but the rules vary wildly. Some states exempt all energy for manufacturers. Others only exempt energy used "directly in production" which means the office lights and break room don't qualify. And the burden of proof is on the manufacturer to demonstrate what percentage of their energy goes to production. In Indiana we have a predominant use study requirement — if more than 50% of electricity goes to production, the entire bill is exempt. Below 50%, nothing is exempt. Know your state's specific rules.
Ray and Eugene both make important points. The manufacturing exemption is one of the highest-value, lowest-effort findings in utility bill auditing. Check every manufacturing client for it. The exemption certificate is usually a simple form filed with the state department of revenue and then provided to the utility. Once filed, the exemption applies going forward and most states allow retroactive claims for 3-4 years. The key question for each state: is the exemption on total energy or only direct production energy? If it's total, just file the certificate. If it's direct production only, you may need a predominant use study to prove the percentage.
Michigan exempts all energy for manufacturers so no study needed — just the certificate. But Eugene's point about Indiana requiring a predominant use study is important for anyone working across state lines. State-specific rules matter.