SALT Report 1157 – An opinion letter issued by the Kansas Department of Revenue discusses the sales tax obligations of a commercial wind farm as a consumer.
Wind farms must pay sales tax on their purchases of tools and construction equipment used to repair and maintain their equipment. Sales tax applies to the sale of materials, HVAC equipment, lighting equipment, and plumbing used in the construction of an operations and maintenance building at a wind farm because such buildings are considered conventional buildings. Likewise, sales of chairs, desks, files and other equipment purchased to furnish these buildings are also subject to sales tax.
However, an exemption would apply under K.S.A Sec. 79-3606(kk) to purchases of qualifying integrated production equipment. Examples of such purchases in the context of a wind farm include:
- Wind turbines
- Support towers
- Wind turbine transformers
- Wiring used in the intra-wind farm electrical collection system
- Tower-mounted supervisory control and data acquisition (SCADA) panels, and,
Labor services related to the original construction of buildings are exempt. Wind farm owners who hire construction contractors to work at the wind farm must provide a completed ST-201 to the general contractor or contractors, and to any subcontractor who requests a copy.
The exemption also applies to a wind farm’s purchases of repair and replacement parts for exempt equipment. In order to claim exemption, a wind farm owner must complete Form ST-201 (Integrated Production Machinery and Equipment Exemption Certificate) and present a completed copy to the seller.
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