Gas Gathering System Parts Exempt in Colorado

Monday, August 25th, 2014

Natural gas pipelines.

The Colorado Court of Appeals recently ruled that a taxpayer's purchases of pipelines and fittings used to gather and deliver natural gas were exempt.

Colorado exempts sales of machinery or machine tools in excess of $500 if the machinery or tools are used solely and exclusively in a manufacturing process in an enterprise zone. For this exemption, "manufacturing" includes quarrying, processing and beneficiation, or otherwise extracting from the earth any natural resource.

The taxpayer operated wells and compressor sites in an enterprise zone. The taxpayer used a gathering system with pipelines and fittings to maintain pressure, extract natural gas from each well, and move the gas to compressor or processing stations for final processing. Essentially, this system transported the gas from the extraction site to the processing site. The state argued this gathering process was not part of the "manufacturing" process and that the taxpayer could not purchase pipelines and fittings exempt.

The Court ruled that these items were used in a manufacturing process and were therefore exempt. The gathering process was part of a larger extraction and processing system. These items were used to move the product (gas) from one step of the manufacturing process to another. The pipelines and fittings were therefore directly used in manufacturing.

About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at or call 866.578.8193.

Nevada Exempts Certain Medical Equipment

Monday, June 17th, 2019 -Effective July 1, 2019, Nevada will exempt durable medical equipment, oxygen delivery equipment, and mobility ...

Participatory Sports are Taxable in New York

Friday, June 14th, 2019 -The New York Division of Tax Appeals recently denied a refund claim made by an instructor-led indoor spin clas...

Marketplace Facilitators to Collect Tax in Vermont

Thursday, June 13th, 2019 -Vermont recently passed a bill requiring marketplace facilitators to collect and remit sales tax on retail sal...

Agricultural Rotary Cutter Taxable in Arkansas

Wednesday, June 5th, 2019 -The Arkansas Department of Finance and Administration (DFA) recently determined that a rotary cutter used in t...

Wholesale Exemption Applies to Meals Purchased by...

Monday, June 3rd, 2019 -The Colorado Supreme Court recently ruled that a food service vendor made exempt wholesale sales of food and f...

Specialized Tools to Install Prosthetic Devices are...

Friday, May 31st, 2019 -The Wisconsin Tax Appeals Commission recently ruled that specialized tool kits used to install prosthetic devi...