OVER $340K IN RETROACTIVE SAVINGS FOUND, PLUS $85K IN SAVINGS PER YEAR
Our client, Siemens, is a Global 500 company that focuses on the areas of electrification, automation, and digitalization.
DMA was asked to review two of its sites – a research and development site for medical equipment and supplies and a manufacturing site for medical supplies. The manufacturing site in Indiana had previous exemptions in place with utility companies, but due to an acquisition that resulted in a name change and new tax identification number, the exemption was no longer valid and it was charged sales tax at the full rate. Additionally, the utility company changed the meter number, which invalidated any previous utility study performed at this location.
The research and development site did not have any exemptions and had never had a utility study performed at the location. The state of New York had the company under audit and would not allow a reduction in the sales tax paid without a utility study.
As a long-standing client of DMA, Siemens engaged us to perform electric, natural gas, and water utility studies at its manufacturing site as well as electric and natural gas studies at its R&D site.
DMA experts collected all utility bills, plant diagrams, and other supporting documentation as well as met with plant personnel to begin the study for each location. They also took plant tours to identify all equipment that consumed electricity, gas, and water to determine if it might be used in the manufacturing or R&D processes. Additionally, the rated capacity (horsepower, amps/volts, BTUs, gallons/hr. etc.) and average running time for each piece of taxable and non-taxable equipment was noted.
Once all of this information was compiled, the DMA team was able to determine that greater than fifty percent of the electricity, natural gas, and water were being used directly in manufacturing at the site in Indiana. The manufacturing site qualified for a full exemption, resulting in approximately $60K in savings per year going forward. They also filed and obtained retroactive sales tax refunds from the state totaling $240K for the previous four years.
For the R&D site in New York, DMA determined that 59% of electricity and 54% of the natural gas were exempt in the state of New York, resulting in an approximate savings of $25K in savings going forward. They also filed and obtained retroactive sales tax refunds totaling over $100K, which ultimately offset the cost of the audit assessment.
“DMA is a great partner and a valued addition to our tax team. When we needed assistance with utility studies at our facilities, their utility experts made the process as smooth as possible for us. DMA identified and implemented the necessary actions for significant ongoing savings, as well as claiming prior overpayments. I can’t thank DMA enough for the value they bring to Siemens.”
—Tax Director, Siemens Corporation
DMA, a proudly employee-owned company, has been solving corporate tax challenges for its clients around the world since 1972. Focusing on several key areas of corporate taxation—property tax, state income and franchise tax, transaction tax, tax technology, Canada sales tax, value added tax, unclaimed property, telecommunications tax, fuel and excise tax, severance tax, credits and incentives, customs and duty, and crown royalties—DMA professionals assist companies with minimizing their taxes, enhancing the efficiency of their tax administration through industry-leading technology solutions, and managing their tax compliance obligations.