Phase out for excise tax on piped natural gas began Oct. 1, 2007
A new law that phases out the excise tax on piped natural gas for selected manufacturers and farmers went into effect Oct. 1, 2007, according to the N.C. Department of Revenue. The amount of the tax decreases each year until it is phased out completely in 2010.
Certain manufacturers that operate manufacturing facilities and farmers who use the gas for any farming purpose other than preparing food, heating their homes and other household purposes are eligible for the reduced rate. Manufacturers are those businesses classified under industry sectors 31, 32 or 33 of the North American Industrial Classification System.
Facilities in these sectors may be described as plants, factories, or mills; they use power-driven machines and materials-handling equipment. For a complete description of the sectors, including exceptions go to www.census.gov/naics/2007.
To qualify for the reduced rate, a farmer or manufacturer must submit a completed copy of a Streamlined Sales and Use Tax Agreement Certificate of Exemption form to the provider of the natural gas. The provider will then pay the appropriate tax to the state. A copy of the form can be downloaded at www.dor.state.nc.us/downloads/fillin/E595E_webfill.pdf .
Please note, a taxpayer only becomes eligible for the reduced rate of tax by meeting the eligibility guidelines and submitting the form. Gas providers may not recalculate the tax liability using the lower rate for the time before their client provided the form.
A manufacturer purchasing piped natural gas for a qualifying purpose is required to enter its sales and use tax registration number on the exemption certificate. A farmer purchasing piped natural gas for a qualifying purpose is required to enter the appropriate exemption number as assigned by the Sales and Use Tax Division of the N.C. Department of Revenue. Meter number(s) should also be noted on the form. Meters for gas that is not used primarily in a manufacturing process should not be included. No prorating is allowed for mixed-use meters.
If you have questions about eligibility, Form E-595E or any other aspect of this issue, please call the Taxpayer Assistance and Collections Center at 1-877-252-3052 or write to the Taxpayer Assistance Division, N.C. Department of Revenue, P.O. Box 25000, Raleigh, N.C. 27640-0001.