Tax Treatment of Purchases Used in Wind Energy Conversion Property Explained
The IDOR has issued a policy letter to explain that the sales price of a crane that is purchased for use in installing wind energy conversion property is exempt from sales and use tax. However, the purchase of equipment used to construct roads for use in the construction of wind energy conversion property is not exempt. Under Sec. 423.3 (54) of the Iowa Code, the sales price from the sale of wind energy conversion property along with the sale of materials used to manufacture, install or construct wind energy conversion property is exempt from sales and use tax. "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. As such, IDOR believes that a crane used to erect towers and raise nacelles and their contents and rotor blades to a proper height qualifies as "materials" used to install wind energy conversion property. IDOR specifically noted that "materials" commonly refers to "tools or apparatus for a particular task." However, a road used to get the "materials" to the site does not qualify as "wind energy conversion property." Thus, the equipment that is purchased for use in constructing these roads does not qualify for the tax exemption. IDOR Policy Letter, 2008-08300008 (Jan. 30, 2008).
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