Beverly from Memphis, TN. MLGW territory. When I got my CUBA certification I had no idea how to get clients. Randy suggested starting with organizations I already had relationships with. My church has a 40,000 square foot campus with a sanctuary, education wing, gymnasium, and commercial kitchen. Electric bill runs about $6,500/month. I offered to review the bills for free as a service to the congregation. Found that MLGW had been charging sales tax on the church electricity for 9 years. Churches in Tennessee are exempt. The refund was $11,200 and the go-forward annual savings is $1,440. The pastor was so grateful he mentioned it in the Sunday bulletin. Three other churches called me the following week.
My church was my first client — found $11,000 in tax exemption errors
Beverly, this is a textbook example of starting with what you know. Religious organizations are exempt from sales tax on utilities in most states but the exemption is almost never applied automatically. The church has to file a certificate with the utility and many never do because nobody tells them about it. You just tapped into a market segment with thousands of potential clients in Tennessee alone.
Beverly, I am in Nashville and the sales tax exemption issue is rampant with churches here too. NES and Nashville Gas both require the church to file a separate exemption certificate. I have audited about 15 churches in the Nashville area and every single one was paying sales tax they should not have been. Average refund is $6,000-12,000 depending on the size of the facility and how long the tax has been applied.
I am in Memphis too Beverly — MLGW territory. I did not realize churches were exempt from the utility tax. Is it just churches or all 501c3 organizations?
Reggie, in Tennessee the exemption covers all organizations with 501c3 status — churches, nonprofits, charitable organizations, private schools. The exemption applies to both electric and gas. The filing process is straightforward: submit a copy of the IRS determination letter and the Tennessee sales tax exemption certificate to MLGW. They remove the tax going forward and process a retroactive refund.
Beverly just described a market opportunity that exists in almost every state. The specific exemption rules vary but the pattern is the same: nonprofits qualify for utility tax exemptions, most do not know about it, and the utilities do not proactively inform them. An auditor who specializes in nonprofit utility billing can build an entire practice around this.
Update for anyone following this thread. The three churches that called after the bulletin mention all had the same tax exemption issue. Combined refunds: $28,400. Then one of those pastors connected me with the Baptist Association which represents 45 churches in the Memphis area. I presented at their monthly meeting and signed up 12 churches for audits that same evening. This is becoming a real niche practice.
Beverly, 12 churches from one presentation is incredible. The referral dynamics in religious communities are powerful because there is a built-in trust network. If Pastor Johnson tells Pastor Williams that you saved his church $11,000, Pastor Williams does not need to see your resume.
Terry, you nailed it. The trust network in the church community is the best referral engine I have found. By the end of my first year I had audited 31 churches across Memphis. Total refunds recovered: $187,000. Total annual go-forward savings: $38,000. All from offering to look at my own church utility bill.