Form ST-13 replaced by online application for small business energy exemption

In some cases, energy sales may be exempt from taxes for qualifying small businesses. For 2019 and later years, small businesses will apply online for an exemption certificate rather than submitting Form ST-13 to their energy provider.

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Requirements for claiming the credit

A qualifying small business must have had gross income of less than $1,000,000 in the prior year and anticipate less than $1,000,000 in the current year. The business must also have 5 or fewer full-time employees and the energy product must be used only by the qualifying business.

As of January 1, 2019, the process for claiming a small business energy exemption has changed. For 2019 and later years, small businesses will now apply online for an exemption certificate rather than submitting Form ST-13 to their energy provider. See below for additional information.

The exemption process is now automated and effective for 2 years

Instead of filling out Form ST-13 for each utility company, the business will complete the information for the exemption online through the Department of Revenue’s MassTaxConnect application to receive the Small Business Energy Exemption Certificate. The Certificate will be effective for two years, rather than one year as it had been.

Additional Resources

Questions and answers for small businesses

The questions and answers below will be helpful as a quick reference for businesses. We also recommend reviewing the regulation for details on how to qualify for, request and revoke a small business energy exemption certificate.


Have the requirements for being considered a small business changed?

No. The requirements for being considered a small business remain the same, but the process for qualifying for an exemption is changing and, will now be automated through MassTaxConnect.


What is a qualifying small business for purposes of the energy exemption?

A qualifying small business must:

  1. Have had gross income of less than $1,000,000 in the prior year and anticipate less than $1,000,000 in current year  
  2. Have five or fewer qualifying employees       
  3. Use the energy purchased solely for itself and not for the benefit of others 
  4. Consider affiliated businesses as one business for purposes of the exemption
     

If I have an ownership in two or more businesses, do the requirements for gross income and qualifying employees apply to all of my businesses to determine if I qualify as a small business? 

Yes, all members of an affiliated business are deemed to be a single taxpayer for purposes of the small business exemption.  The combined gross income and combined number of qualifying employees for all of your businesses must be taken into account to determine if you qualify as a small business.  For more information and the definitions of “affiliated businesses” and “small business” see DOR’s Qualifying Small Business Energy Exemption Regulation.
 

Should I file a paper Form ST-13 for 2019 now?

No. Form ST-13 will not be used for purchases made in 2019 and later years. Register for your 2019/2020 exemption through MassTaxConnect. See information below for how to request a Small Business Energy Exemption Certificate.


How do I request a Small Business Energy Exemption Certificate for 2019?

After you log in to your MassTaxConnect account, you will see a new link under the “I Want To” heading called “Request/Update Small Business Energy Exemption.” If you don’t have a MassTaxConnect account, see information below for how to create one.

Where can I find more information about how to use MassTaxConnect?

Go to MassTaxConnect where you’ll be able to log in, or create a username and password, or register your business.  You’ll also find Frequently Asked Questions and a link to video tutorials. 


How do I obtain an exemption certificate as a business if I’m a Schedule C filer who does not pay other taxes, such as withholding or sales tax?

If you have previously filed a personal Massachusetts income tax return, you should create a MassTaxConnect username and password as an individual taxpayer and you will then be able to register for the small business energy exemption. If you prefer to have your Federal Employer Identification Number [FEIN] associated with the Small Business Energy Exemption, instead of the last four digits of your social security number, please call the DOR contact center at (617) 887-6367. 
 

How do I obtain an exemption certificate if my business is a partnership, corporation, non-profit organization or trust but I have never used MassTaxConnect to file any tax returns or make payments?    

If your business has previously filed a Massachusetts tax return of any type, go to MassTaxConnect and select create my username. Follow the prompts for creating an online account for your business and you will then be able to register for the small business energy exemption.
 

How do I obtain an exemption certificate if my business has never filed a Massachusetts tax return?

If your business has a federal tax ID but has never filed taxes in Massachusetts, go to MassTaxConnect and select “register a new taxpayer.”  Follow the prompts and when asked to choose a tax account, choose Use Tax. Once you set up your MassTaxConnect account and register your business with DOR, you will be able to register for the small business energy exemption.


Can a third party, like an accountant or tax practitioner, register for the Small Business Energy Exemption on behalf of a client?

Yes, a third party with access rights to a client’s MassTaxConnect account for at least one tax type, may register for the exemption on behalf of the client.  The 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.
 

Can a property manager register for the Small Business Energy Exemption on behalf of the properties that he or she manages?

If the property manager is not a trustee (in the case of properties owned by a trust) or an officer of the entity that owns the property, the property manager can register on MassTaxConnect as a third party and then request access rights from each small business in order to file for the exemption on their behalf.
 

When will the 2019 exemption certificate expire?

If you register for an exemption in 2019, it will be good through December 31, 2020, provided there are no changes in the business that would affect eligibility during that time. The Department of Revenue will send a reminder to renew your exemption certificate before the end of 2020.


Will I need a separate certificate for each utility?

No. You will only need to register once for an exemption certificate regardless of the number of utilities you use. You will provide a copy of the exemption certificate, or the certificate number, to each of the utility companies you use for your business.
 

Will we receive separate certificates for each service address for our business?

Yes, although only one certificate number will be issued per business, if you provide multiple addresses, you will receive a separate certificate for each business service address to be shared with the utility vendor for that address.
 

What if my business no longer meets the qualifications for the exemption?

If you registered for the exemption but no longer qualify for it, you must revoke your registration through MassTaxConnect and notify all of your vendors to begin collecting sales tax. You are liable for any unpaid tax on purchases made during the time you did not qualify for the exemption.
 

Can the energy exemption certificate be transferred to or used for the benefit of another business?

No. Each small business energy exemption certificate is for a specific business. Each small business must request its own energy exemption certificate through the Department of Revenue. The energy product purchased with an energy exemption certificate must be used only by the qualifying small business.
 

Are there penalties for the misuse of the energy exemption certificate?

If a business presents an improper certificate, it will be responsible for the full liability of use tax on the purchase, along with applicable penalties and interest. Anyone who aids or assists in fraudulent activities related to obtaining a certificate for exemption will be subject to fines, imprisonment or both.


Are there any changes planned to other sales tax forms such as the ST-2, ST-5, ST-11 or ST-12?

There are no plans to make any changes to any forms other than the ST-13 at this time.

Information for utility vendors

Verifying the validity of an exemption

A vendor must verify that a small business has a current energy exemption before granting the exemption.  

A vendor may verify the exemption by:

  1. Retaining a copy of the DOR issued exemption certificate provided by the small business
     
  2. Using a verification lookup feature through Quick Links on MassTaxConnect. Vendors can use the certificate number provided by a customer, or the customer’s Federal Employer Identification Number. Vendors will receive a response from DOR that includes the certificate number, effective and expiration dates, the certificate status, and the address(es) associated with the certificate number. 
     
  3. Using a web service feature to upload a file and verify multiple exemptions. To use this option, vendors will be required to provide an IP address in advance and will then be allowed access to a secure site.  For more information visit
    Using a web service call to verify a small business energy exemption.  

Renewal of an exemption certificate

Before the expiration date of a small business energy exemption certificate, DOR will send a reminder notice to the qualifying small businesses. As with an original exemption certificate, the small business is required to notify the vendor of the renewal and the vendor must verify the validity of the exemption.  If a certificate is renewed in a timely manner, the certificate number will remain the same. A vendor must begin collecting sales tax from any small business that fails to renew its exemption certificate. 
 

Refund or credit if sales tax is collected during a period when the small business had a valid exemption certificate

The vendor may claim a credit on its next monthly sales tax return provided the vendor refunded the taxes collected to the business. Alternatively, the vendor may file an amended return and seek a refund from DOR. The credit/refund must be claimed within the statute of limitations.
 

Revocation of an exemption certificate

A business that no longer qualifies for an exemption certificate must revoke its registration and notify all of its vendors. Once notified, the vendor must begin collecting sales tax. The Department of Revenue may also notify the vendor if it revokes a business’s exemption certificate.  
 

Recordkeeping

A utility vendor must retain a copy of the SBEE certificate provided by the customer OR a record of the certificate number and associated effective and expiration dates for audit purposes,   In addition, the vendor must comply with DOR’s Record Retention Regulation and maintain records to support any credits claimed for tax collected and paid over to DOR before the vendor was aware that a customer had been granted an exemption. 

Utility vendors will be required to provide an annual report to DOR which includes the customer name, service location and gross annual exempt sales for each exemption certificate number the vendor has on record.  The first such report will be due early in 2020 for calendar year 2019.  Additional information about the reporting process will be added. 

Contact

Tax Department: DOR's call center hours for tax help are 8:30 a.m. - 4:00 p.m., Monday through Friday. (617) 887-6367 or (800) 392-6089 (toll-free in Massachusetts)

Visit DOR Contact Us for all other ways to connect with DOR.

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