Sales, Use and International Tax Activity Update - July 2010

California’s Longest Acronym Ready to Reward Green Energy

Legislation enacted this year amended the California Public Resources Code to allow certain manufacturers of green technology to purchase manufacturing equipment without payment of California sales or use tax.

Manufacturers who wish to obtain the exclusion must apply to the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA). Although there is an existing exclusion for purchases of equipment that constitutes projects, as defined, when the equipment is transferred from the project sponsor to CAEATFA or from CAEATFA to the project sponsor, the legislation expanded the definition of project to include manufacturing equipment used to produce alternative energy, effective March 24, 2010, until January 1, 2021.

Generally, any tangible personal property that is considered a project, as defined, qualifies for the exclusion. Questions regarding whether particular items of equipment, machinery, fixtures, or materials qualify as a project should be directed to CAEATFA. CAEATFA has the authority to approve projects that would be excluded from sales and use tax and to specify the criteria under which CAEATFA would approve those projects.

Special Notice L-259, State Board of Equalization, June, 2010.

The Special Notice L-259 can be viewed on the California State Board of Equalization Web site.

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