Thinking of developing a wind farm, or building a single wind turbine?
In a letter ruling issued earlier this month at the request of a taxpayer, DOR ruled that sales of machinery used to construct a wind turbine, tower and components, and the supporting foundation are exempt from Massachusetts sales tax under G.L. c64H Sec. 6(s).
The reason? The turbine, tower and components and supporting foundation qualify as machinery that is used directly and exclusively in furnishing electricity that is delivered to consumers through mains, lines or pipe. Such machinery, according to 64H Sec. 6(s), is exempt from sales tax.
The ruling on wind turbines breaks new ground in that DOR has never before been asked the question about the applicability of this exemption to wind turbines. It probably won't be the last time.
While the letter ruling applies only to the individual taxpayer, it also sets a precedent which well might apply to which other taxpayers engaged in a similar project. Such taxpayers are urged to contact DOR for clarification rather than to assume the exemption.
The ruling in its concluding paragraph notes that "with respect to other machinery required to build the wind turbine, tower or foundation, such machinery is exempt only if it becomes a part of the integrated and synchronized system that furnishes the electricity to consumers … for example, machinery such as erection cranes, support cranes and bulldozers are subject to tax."
But the blade, turbine, tower and the equipment used to capture the energy and sent it on its way are exempt from the sales tax.
With interest growing in harnessing the wind to provide clean and renewable energy, this letter ruling may provide some additional financial incentive to wind energy developers.