9511223L



November 27, 1995


************
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************
************
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Dear ************:

Thank you for your letter of November 2, 1995, concerning predominant use 
studies for utilities purchased for apartment complexes.

The association submitted three utility studies for apartment complexes located 
in the Austin area. The complexes varied in size containing from 80 to 396 
units. The studies were for electric meters that included both commercial use 
(management office) and residential uses such as club rooms, laundry rooms, 
swimming pool pumps, and outside lighting. The master meters did not service 
any residences (vacant or occupied). The studies indicate taxable usage of 11% 
to 23%. You have requested that this office issue an opinion stating that 
master meters providing electricity to onsite management offices should be 
exempt from sales tax without each individual property having to conduct a 
predominant usage study.

Apartment complexes fitting the above scenario may submit an exemption 
certificate to utility companies without performing a utility study. Our field 
auditors will be notified that the exemption will not be denied to apartment 
complexes solely due to the absence of a study. An auditor may request that a 
study be performed if the auditor is of the opinion that the apartment complex 
in question differs from the above scenario to the extent that predominant 
residential usage is in doubt.

This agreement is expressly made to save apartment complexes the cost of 
performing individual studies in fairly obvious cases of predominant 
residential use. It does not bar assessment of any unpaid taxes when the 
predominant usage is found to be nonresidential. For instance, if the auditor 
determined that the complex had significant nonresidential usage such as office 
suites, daily or weekly rental pools, etc., and a study showed that less than 
50% of the usage was exempt, the auditor would assess tax, penalty and interest 
as appropriate.

Should you have any additional questions, please do not hesitate to contact me 
or Karey Barton, Manager, Tax Policy, toll-free at 1-800-531-5441, extension 
3-4987.

Sincerely,


Wade Anderson
Director, Tax Policy

cc: Glen Hunt, Director, Research & Policy Development
Karey Barton, Manager, Tax Policy


ACCESSION NUMBER: 9511223L  
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 11/27/1995
TAX TYPE: SALES