Massachusetts Makes Changes to Small Business Energy Exemption

Massachusetts has made changes to its procedure to qualify for the state’s small business energy sales and use tax exemption. The exemption covers qualifying purchases of gas, steam, electricity and heating fuel. Effective January 1, 2019, the process to qualify for the exemption is now automated through MassTaxConnect, the state DOR’s online application for filing and paying taxes. For 2019 and later years, small businesses must apply online at MassTaxConnect for an exemption certificate rather than submitting Form ST-13 to their energy provider. The paper Form ST-13 is no longer used. For qualified taxpayers, the energy exemption is valid for two years (previously one year). All current exemptions were automatically extended through March 31, 2019. Taxpayers were required to register for their 2019/2020 exemption before their current exemption expired on March 31, 2019. A third party with access rights to a client’s MassTaxConnect account for at least one tax type can register for the exemption on behalf of the client. The exemption certificate will be mailed to the client. Only the client will be able to obtain a copy of the exemption certificate or view the certificate through MassTaxConnect.

To qualify for the exemption, a small business must have had gross income of less than $1 million in the prior year and anticipate less than $1 million in the current year. The business must also have 5 or fewer full-time employees and the energy must be used only by the qualifying business. The small business must consider affiliated businesses as one business for purposes of the exemption. For additional information on the exemption, visit the Massachusetts DOR webpage. (Release, Massachusetts Department of Revenue, February 12, 2019)

Posted on February 16, 2019