Gas Gathering System Parts Exempt in Colorado

Monday, August 25th, 2014

 
 
Natural gas pipelines.
Share
Link
Colorado
General

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.

http://www.courts.state.co.us/Courts/Court_of_Appeals/Opinion/2014/12CA1703-PD.pdf


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 www.ttrus.com or call 866.578.8193.

Economic Nexus in Washington

Monday, August 13th, 2018 -Effective October 1, 2018, certain out-of-state businesses will be required to collect and pay Washington sale...

Economic Nexus in Michigan

Thursday, August 9th, 2018 -Effective October 1, 2018, certain out-of-state sellers will be required to collect and pay Michigan sales or ...

Georgia Suspends Tax on Jet Fuel

Wednesday, August 8th, 2018 -Effective August 1, 2018, Georgia no longer collects state level sales and use tax on jet fuel. Georgia tax...

Employment Services Contracts for Permanent Employees Not...

Monday, August 6th, 2018 -The Ohio Board of Tax Appeals recently addressed whether contracts entered into by an employment services agen...

Alarm Systems and Monitoring Not Taxable in Missouri

Wednesday, August 1st, 2018 -The Missouri Department of Revenue recently released a ruling determining that (1) security, fire, tornado, an...

Economic Nexus in Utah

Wednesday, August 1st, 2018 -Effective January 1, 2019, certain out-of-state sellers will be required to collect and pay Utah sales or use ...