Colorado – Machinery and Equipment Used for Generating and Distributing Electricity is Exempt

SALT Report 1159 – A Colorado Court of Appeals found that a Colorado taxpayer was entitled to a sales and use tax refund on purchases of machinery and machine tools used in the production and distribution of electricity.

The court found that electricity is a tangible personal property and the generation of electricity is a manufacturing process.  Accordingly, the taxpayer was entitled to the machinery and enterprise zone machinery tax exemptions, and the purchase of machinery and machine tools used in the generation and transmission of electricity was exempt from sales and use tax.

The taxpayer was entitled to a refund of the taxes previously paid on these purchases.  Additionally, the court found that transformers were a necessary part of the generation of electricity and also subject to the exemption.

For Further Information:

Colorado Court of Appeals No. 10CA1026

FYI – Manufacturing Equipment Exemption