Auditing county buildings in Omaha served by OPPD. Found that the county is paying Nebraska state sales tax on their electric bills. Isn't a county government automatically exempt from state sales tax? Why would OPPD be collecting it?
Government entities paying sales tax — they shouldn't be
Government entities are exempt from sales tax in Nebraska and every other state I'm aware of. But like everything else in this business, the exemption isn't automatic. The government entity has to file an exemption certificate with the utility. Many government accounts were set up years ago by someone who didn't know to file the exemption or assumed it was handled automatically. OPPD will stop charging the tax once the exemption certificate is on file, and you should be able to get a refund for the lookback period. I found the same issue with the city of Wichita on their Evergy accounts.
This is one of the most common and most easily corrected findings in utility bill auditing. Government entities at every level — federal, state, county, city, school districts, water districts, housing authorities — are exempt from sales tax on utility purchases. Yet many pay it because nobody filed the exemption certificate. The fix is simple paperwork but the cumulative savings can be enormous for a government client with dozens of accounts. Check every government account you audit for unfiled sales tax exemptions before doing anything else.
Filed the exemption certificate with OPPD for all 14 county accounts. OPPD removed the sales tax immediately and issued a 36-month refund totaling $67,000. The county administrator was stunned — nobody had ever checked this. That single finding covered my contingency fee plus earned me a multi-year engagement for ongoing monitoring of all county utility accounts.