The Indiana Department of Revenue recently held that a taxpayer's purchase of electricity was exempt because the electricity was predominantly used to power exempt equipment.
The taxpayer was a restaurant owner that claimed a 100% exemption on electricity purchases. The claimed exemption was based on a previous utility study that showed electricity purchased by the taxpayer was predominantly used to power exempt kitchen equipment.
Indiana's manufacturing exemption applies to kitchen equipment used to produce food. The exemption also applies to electricity that is predominantly used to power exempt equipment. "Predominant use" means more than 50% percent. The ruling found that the taxpayer's electricity purchases met the predominant use requirement.