Replacement Parts for Wind Farm Taxable in Washington

Friday, February 3rd, 2017

A wind farm.

The Washington Department of Revenue ruled that a taxpayer's purchase of parts for its wind farm was taxable.

The taxpayer had a wind farm in Washington and purchased transformers for its wind turbines. The new transformers replaced older worn out or broken transformers. The taxpayer sought a refund of tax paid on the transformers.

Washington exempts machinery and equipment used to generate electricity using wind energy. This exemption does not apply to replacement parts unless the parts increase the productivity, efficiency, or useful life of machinery. It also does not apply to repair parts if the parts only restore machinery to its normal working condition.

The Department ruled that the new transformers were replacement parts. They did not increase the turbines' productivity, efficiency, or useful life. As a result, they were taxable.

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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.

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