Nebraska Grain and Feed Association
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NDR RESPONDS TO NGF ON ENERGY SALES TAX REFUND FOR GRAIN ELEVATORS

NDR ISSUES DRAFT RULING, ELEVATORS MUST FILL OUT FORM 13E TO APPLY FOR STATE SALES TAX REFUND, EXEMPTION

 

Last month the Nebraska Grain and Feed Association (NGF) contacted the Nebraska Department of revenue (NDR) about the state program which allows manufacturers to claim an energy sales tax exemption or refund if the manufacturer can document that the electricity or fuel consumed was directly used for the processing, manufacturing or refining process of tangible personal property.  Many members are aware that if you can document to the Nebraska Department of Revenue (NDR) that at least 50% of the energy consumed in your facility adds value to your product, you can claim a 100% sales tax refund on your energy consumption.  This would include the energy used to dry grain. 

NGF was aware that the NDR has been reviewing their current rules governing the sales tax exemption or refund for energy used for drying grain and the Association sent a letter to Revenue Commissioner Doug Ewald on December 17, 2009 requesting that his department review the current policy governing the sales tax refund for energy used for drying grain.  The Association noted that the record late harvest will force elevators to store millions of bushels of grain on the ground.  “While this presents an unfortunate necessity during record harvests such as this year, these grain elevators are required to pick up the grain for storage or shipment within a certain period of time.  As this grain is gradually picked up, corn especially must be dried or aerated down to a storable temperature as it is commingled with other elevated corn.  The process of picking up these ground piles will take several months as the grain is transported from various satellite locations to permanent terminal storage facilities that have the throughput and drying capacity necessary to maintain the integrity of that grain.”

The NDR responded today with the following letter and draft revenue ruling titled “Taxability of Energy Sources Used by a Commercial Grain Facility That Dries and Stores Grain.”

January 8, 2010

Patrick J. Ptacek

Executive Vice President

Nebraska Grain and Feed Association

1233 Lincoln Mall, Suite 200

Lincoln, NE  68508-3401

Dear Mr. Ptacek:

This letter is in response to your inquiry dated December 17, 2009. 

Enclosed is the draft revenue ruling titled “Taxability of Energy Sources Used by a Commercial Grain Facility That Dries and Stores Grain.” The draft revenue ruling recognizes:

·        That grain drying can occur on an ongoing basis not just during a specific period of time;

·        That any type of grain can be dried, not just corn;

·        There are non processing (nonqualified) uses of energy at a commercial grain facility; and 

·        The need to maintain detailed records to support any analysis of energy usage for which an exemption certificate is issued.

As noted in your letter, the Department has previously set forth its position regarding the use of energy to clean, sort, and blend grain.  The Department maintains its long standing position that energy used to clean, sort, and blend grain is not a qualified use of energy.     

The Department looks forward to your comments on this draft ruling in a continuing effort to work with you and others on this matter.  Please send your comments to me via letter or e-mail.  My e-mail address is cliff.thomas@nebraska.gov

FOR THE STATE TAX COMISSIONER

Sincerely,

Clifford W. Thomas

Tax Specialist

Policy Section

We would encourage you to contact the Association with your comments or comment directly to Cliff Thomas at the NDR regarding your thoughts or opinions on the draft ruling.  In any case, if you are pursuing a claim for an energy sales tax exemption, you must fill out an NDR Form 13E for each meter.  Please click this NDR link to print and fill out NDR Form 13E, http://www.revenue.ne.gov/tax/current/f_13e.pdf.  The Association will be preparing industry comments on the NDR draft ruling and we will continue to keep you informed of any additional developments.

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Nebraska Grain and Feed Association
4600 Valley Road, Suite 416
Lincoln, NE 68510-4844
Phone: 402-476-6174
Fax: 402-476-3401