Government Buildings Are Leaving Millions on the Table in Tax Exemptions.

The vast majority of U.S. states exempt government entities — municipalities, counties, state agencies, school districts, public universities — from sales and use taxes on utility purchases. In states like New York, this exemption can represent 5-11% of the total utility bill.

The exemption does not apply automatically. It requires a specific application or exemption certificate to be filed with the utility, and it must be maintained as account details change. In our government audit sector work, we find that the exemption is missing, lapsed, or incorrectly applied in approximately 30% of government utility accounts.

The recoverable period for improperly charged taxes varies by state but typically extends three to six years. For a county government spending $4 million annually on utilities and paying 6% in taxes that should be exempt, the three-year recovery is $720,000. We have seen recoveries exceed $2 million for large municipal portfolios. This is just one of a myriad of government related utility billing errors.

This is a not to be missed recovery category. The entitlement is clear, the documentation process is known, and the refund calculation is precise. Yet it remains regularly unclaimed.