Taxing Times For National Grid Customers
Utility no longer files for exemption on small businesses' behalf
The law exempts businesses with fewer than five employees and which make less than $1 million in annual gross profit from paying sales tax on utilities. However, changes made to the law in 2005 may be putting too much responsibility for getting the exemption on small businesses themselves.
"The law doesn't work the way small business owners would like it to in this case," said Bob Bliss, a state Department of Revenue spokesman.
Small businesses that qualify for the exemption are supposed to file a state ST-13 form every year. If done properly, those businesses won't be charged sales tax. However, if a qualified small business fails to file the form, it may present it to its utility provider later and the utility "may apply to the Commissioner (of the state Department of Revenue) for an abatement of sales tax in accordance with the requirements of the abatements regulation," according to the law. Bliss noted that the law doesn't require the utility to apply for the abatement on behalf of its deadline-challenged small business customers.
And at the beginning of the year, National Grid took advantage of that ambiguity and told its customers it would no longer apply for sales tax abatements on their behalf.
Resource Intensive
Jackie Barry, a National Grid spokesman, said the utility does all it can to help its customers take advantage of the exemption. But acting as a go-between with DOR in order to secure small abatements that "could conceivably be requested by hundreds of customers" that forgot to file for the exemption in the first place just doesn't make sense to Grid.
At some point, business owners must take responsibility for securing their own entitlements.
"When customers of this size are eligible for this exemption, they're informed in writing and they're told how to go about filing," Barry said. "In the past, if a customer didn't file, we would rebate the money up front" and then go about applying for a refund from DOR. "It was a very resource-intensive process," she said.
A business that forgets or neglects to file for its exemption could file directly with the DOR for a rebate, but would also need National Grid to grant the business power of attorney, something that Barry said the utility simply won't do.
So, it's all up to the business owners themselves and area chambers of commerce say the sales tax exemption is already underused, despite goading and encouragement.
"We've been telling members, 'you've got to do something,'" in order to be exempt, said Theodore Welte, president and CEO of the MetroWest Chamber of Commerce.
Welte said a small business that's run properly should be able to stay on top of the paperwork for the exemption, even if it only means a savings of a few dollars. He said he'd hate to see the exemption go unused just because businesses can't file for the exemption on time.
"Businesses are struggling with all the other regulations and paperwork and this one might fall through the cracks, unfortunately," he said.
Michael Lanava, business resource manager at the Worcester Regional Chamber of Commerce, said the chamber's members haven't complained about how the exemption works. But it may be underused. He said a business' accountant should keep them on top of the exemption.
"You have to submit the form and be in compliance at the time you purchase the goods," Lanava said. "I know people use it. It is a niche group, and one of the things is to make people aware of it. It's probably not the most widely used (exemption)."
He said the chamber does what it can to educate small businesses about the availability of the exemption.
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