Electricity sales tax for power storage equipment

Beginning on July 1, 2014, manufacturers and certain research and developers, and beginning on January 1, 2018, certain electric power generators and distributors, may qualify for a partial exemption from sales and use tax on the purchase or lease of qualified machinery. “States may impose several taxes on renewable generation companies, including income tax, franchise tax, capital stock tax, gross receipts tax, property taxes and sales and use taxes,” Wade and Herzberg wrote. The California Department of Tax and Fee Administration has amended their Code of Regulations to expand their partial sales and use tax exemption for research and development to include the production, storage, and distribution of electric power. In this installment of Andersen’s Sodium Podium, the authors discuss the differing property tax and sales tax considerations regarding battery energy storage systems and examine the policies of four states in depth.