Death and taxes — they’re two things that are both inevitable and universally disliked. Although most people understand that taxes are a necessary evil to make the government function, that doesn’t mean that they’re happy about it. As Arthur Godfrey once said, “I’m proud to pay taxes in America. The only thing is, I could be just as proud for half the money.”
Half the money might not be realistic, but there are quite a few deductions that could knock a decent chunk off your tax bill that many people don’t know about. One such option is the utility tax exemption. In many states in the Midwest, it’s possible for manufacturers to claim an exemption from paying taxes on utilities used in production for both agriculture and industrial production. For instance, if you own a farm in Iowa and use a machine that runs on electricity to remove your husks of corn from the stalk, you can claim an exemption from the taxes on the electricity you used for separating the corn. That’s because in that case, it’s considered part of the production process to get the corn ready to be sold. But in order to avoid paying that tax, you’ve got to claim the exemption in the first place. Too often, tax exemptions go unclaimed, because the taxpayer who is legally entitled to that money either doesn’t know the exemption exists, or doesn’t know how he or she can legally claim it, leaving free money on the table.
In that example, that’s where Iowa utility sales tax consultants can help. In Iowa and in 25 other states, the exemption from utility sales tax is ready and waiting for eligible business owners to claim. But it takes someone who knows about the exemption and what qualifies for the exemption to successfully claim it. Returning to the corn example, if you take the corn after removing it from the stalk and use more electricity to store it in your barn, that electricity can’t be claimed. Storage isn’t considered part of the production process, so that electricity is not eligible for a tax exemption. A good consultant knows the difference and can help ensure that the business owner is both paying the least amount of tax possible and isn’t going to get in trouble with the IRS for misrepresenting his or her tax exemptions. That might be the biggest reason why an experienced consultant is a good idea if you want to claim this exemption. Nobody wants to deal with an audit when the spring rolls around and tax season arrives.
Getting a small business off the ground is a difficult challenge in this day and age, and it isn’t getting any easier. Whether you’re getting yourself off the ground or trying to balance the budget for a business that has been in the family for years, every dollar that the business can save is critical. Sure, tax money is critical for the government, but those tax savings could be the difference that allows the hiring of a new worker, which leads to the government making more money than it would have received without the business owner taking the exemption. That’s why it’s a good deal for business owners and a good deal for the government itself, and that’s why it makes sense to look into taking this valuable exemption in the 26 states that allow business owners to do so. If you’re using utilities for product manufacturing, Iowa utility sales tax consultants can make sure that you get the tax exemption you deserve to expand your productivity and grow your business. It’s a great option to explore in the Hawkeye State.
Related Articles -
Iowa, Utility, Sales, Tax, Consultants,