We have received reports that some consultants are calling gins and encouraging the gins to get a predominate use study done for sales tax purposes. Cotton gins are exempt from paying sales tax on natural gas and electricity as a processor and no gin should pay sales tax on natural gas or electricity in the gin plant. When this rule first went into effect, TCGA worked with the Texas Comptrollers Office and performed a state-wide predominate use study. Using the results of this study, the Comptroller issued a ruling letter which specifically states that cotton gins are exempt from paying sales tax on gas and electricity, and it also states that no predominate use study is required. Click here to see the letter.
We appreciate the members giving us a heads-up on this issue, and please give your association office a call if you receive any type of information that seems questionable. We get many of our best tips from ginners that have picked up this type of information.