Food processing client in Georgia is getting hit with sales tax on electricity even though they should qualify for manufacturing exemption. Problem is Georgia Power classified them as NAICS 722513 (limited service restaurants) instead of 311 (food manufacturing) because they have a small retail cafe on-site. The cafe uses maybe 2% of total electricity but it's disqualifying the whole account. Anyone dealt with mixed-use NAICS classification issues?
Manufacturing Tax Exemption - NAICS Code Issue
Iris - We've seen this with several food processors. The key is getting separate metering for the retail portion if possible, or at least detailed load analysis showing the manufacturing operations are predominant. Georgia DOR usually allows pro-rata exemptions if you can demonstrate the split. What kind of processing do they do?
Duane, they're a meat processing facility - slaughter, butchering, packaging. The cafe is literally just a small employee lunch counter. Manufacturing operations are definitely 95%+ of the load. Problem is it's all on one meter. Separate metering would cost $15K+ but they're paying about $3,200/month in unnecessary sales tax.
At $38K+ annual tax savings, separate metering pays for itself in under 6 months. But first try the engineering study approach - detailed load calculations showing cafe usage. Sometimes DOR will accept that without requiring physical meter separation. Worth a shot before spending on new metering infrastructure.