Electrical and Natural Gas Distribution Equipment Exempt as Industrial Processing Equipment

Wednesday, October 22nd, 2014

 
 
Natural gas oven.
Share
Link
Michigan
General

The Michigan Court of Appeals ("Court") recently ruled that a utility company's distribution equipment was exempt.

The taxpayer was a utility company that provided natural gas and electricity. The taxpayer owned and operated distribution equipment for electricity and gas. This equipment included transmission lines, substations, compressor stations, and transformers. The equipment transmitted electricity and natural gas from generation plants to the customers' locations. It also modified the gas and electricity to make them usable and safe for customers.

Michigan exempts from use tax any tangible personal property that an industrial processor uses in industrial processing. "Industrial processing" is the activity of converting or conditioning tangible personal property by changing the form, composition, quality, combination, or character of the property for ultimate sale at retail. "Tangible personal property" includes electricity and gas.

The Court ruled that the taxpayer's distribution equipment was exempt. The taxpayer was an industrial processor because it converted or conditioned electricity and gas for sale at retail. Because the equipment modified the electricity and gas before they reached customers, it was used in industrial processing.

http://publicdocs.courts.mi.gov:81/OPINIONS/FINAL/COA/20141016_C316038_36_316038.OPN.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.

Vehicles Used to Transport Materials between Facilities...

Wednesday, August 15th, 2018 -The Arkansas Department of Finance and Administration recently ruled that a vehicle used to transport in-proce...

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...