Pennsylvania recently ruled that a taxpayer that was preparing to construct a solar energy facility in Pennsylvania was considered a manufacturer for sales and use tax purposes. The facility would convert light energy into electricity and the output would be transferred to a public utility. This ruling is significant because it allows the taxpayer to take advantage of the so-called manufacturer’s exemption. Under the manufacturing exemption, machinery, equipment, parts and supplies used in the manufacturing business are exempt from sales and use tax. The ruling held that the taxpayer may purchase all machinery, equipment, parts and supplies used from the initial stage of the photovoltaic process and ending at the final production stage (where the electricity is accepted by the public utility purchaser) free from sales tax. See Pennsylvania Sales and Use Tax Ruling No. SUT-10-001 (Apr. 7, 2010); exemption is found at 72 P.S. 7201(k)(8)(A).
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