Wisconsin Department of Revenue (“DOR”) Publication 203 discusses sales and use tax information for manufacturers. The Wisconsin statutes contain several exemptions from sales and use taxes for certain types of manufacturing property and other component parts. Until recently, it was unclear what equipment of a wind farm generation facility, if any, was exempt from sales tax. The DOR recently released an updated Publication 203 which contains more guidance on the issue.
The updated Publication 203 contains an example of a typical wind farm generation facility, discusses certain equipment used at the facility and determines whether that equipment qualifies for the exemption provided for in Wisconsin Statute Section 77.54(6)(a).
Wisconsin Statute Section 77.54(6)(a) provides an exemption from sales tax for machines and processing equipment, used exclusively and directly by a manufacturer in manufacturing tangible personal property. By the updated Publication 203, the DOR has determined that the following equipment qualifies for the exemption, provided it is used exclusively to manufacture electricity:
1. Generator unit
2. Wind turbine blade assembly
3. Wind turbine tower
4. Associated equipment which is used exclusively and directly in the operation and control of the wind turbine blade assembly and the generator unit.
Alternatively, the DOR has determined that the following property does not qualify for the sales and use tax exemption:
1. Tangible personal property used to monitor and control the flow of electricity from the generator unit to the point where electricity is transferred to the facilities of the independent transmission company. This includes the following:
a. Conductors from the generator to the pad mount transformer
b. Junction boxes
c. Collector system grounding transformers
d. Circuit breakers
e. Substation transformers
f. Double ended breaker switches
g. Any equipment used to monitor such property as well as the wind turbine blade assembly and the generator unit for purposes of repair or maintenance.
2. Real property improvements, including the foundations for any of the equipment mentioned in Sub (1) directly above, components of the underground collection system and roads which provide access to the wind farm facilities
3. Real property improvements to the substation and switch yard.
Pursuant to the rules of professional conduct set forth in Treasury Department Circular 230, this communication was not written or intended to be used, and it cannot be used for the purpose of avoiding federal tax penalties.