May 24, 2010

 

 

Your recent letter to the Iowa Department of Revenue has been given to me for reply.  You are requesting information on behalf of a client that is in the process of purchasing wind turbine blades for use at its wind farm facility.  Your client uses the facility for electric power generation.  The blades are sold as a matched set of three blades, specifically made to fit together to constitute the entire rotor on the wind turbine.

 

You ask if the purchase of the sets of wind turbine blades are exempt from the Iowa sales and use tax under either of the following exemptions:

 

1.  Iowa Code Section 423.3(54):

423.3  Exemptions.

There is exempted from the provisions of this subchapter and from the computation of the amount of tax imposed by it the following:

54.  The sales price from the sale of wind energy conversion property to be used as an electric power source and the sale of the materials used to manufacture, install, or construct wind energy conversion property used or to be used as an electric power source.

For purposes of this subsection, "wind energy conversion property" means any device, including but not limited to a wind charger, windmill, wind turbine, tower and electrical equipment, pad mount transformers, power lines, and substation, which converts wind energy to a form of usable energy.

 

2.      Iowa Code Section 423.3(47)(a):

423.3  Exemptions.

There is exempted from the provisions of this subchapter and from the computation of the amount of tax imposed by it the following:

47. a.  The sales price from the sale or rental of computers, machinery, and equipment, including replacement parts, and materials used to construct or self-construct computers, machinery, and equipment if such items are any of the following:

(1)  Directly and primarily used in processing by a manufacturer.

(2)  Directly and primarily used to maintain the integrity of the product or to maintain unique environmental conditions required for either the product or the computers, machinery, and equipment used in processing by a manufacturer, including test equipment used to control quality and specifications of the product.

(3)  Directly and primarily used in research and development of new products or processes of processing.

(4)  Computers used in processing or storage of data or information by an insurance company, financial institution, or commercial enterprise.

(5)  Directly and primarily used in recycling or reprocessing of waste products.

(6)  Pollution-control equipment used by a manufacturer, including but not limited to that required or certified by an agency of this state or of the United States government.

 

Sets of wind turbine blades which constitute the rotor of the wind turbine qualify as materials used to construct the wind turbine.  Because this more specific exemption exists and your client’s purchases qualify under the exemption, it is not necessary to consider whether or not the purchases would qualify under the manufacturing machinery and equipment exemption in § 423.3(47)(a).

 

Please be advised that this is an informal opinion of the author and is only applicable to the factual situation referenced and to the statutes in existence at the time of issuance.  Because of this, the Department could, in the future, take a position contrary to that stated in this e-mail.  Any oral or written advice or opinion rendered to members of the public by Department personnel that is not pursuant to a Petition for Declaratory Order under 701 IAC 7.56 is not binding upon the Department.

 

I hope this information is helpful.  If you have additional questions, do not hesitate to contact me at the address above or at Victoria.daniels@iowa.gov.

 

Very truly yours,

 

Victoria L. Daniels

Manager, Tax Policy & Audit Services