Current through Register Vol. 30, No. 38, September 20, 2024
A. Gross receipts from the sale of machinery,
equipment, or transmission lines for direct use in a transmission system are
deductible from the tax base. Gross receipts from the sale of machinery,
equipment, or lines for use in a distribution system are taxable.
B. Machinery and equipment used to facilitate
the production of voltage up to and including 34,500 volts shall be considered
part of a distribution system.
1. Gross
receipts from the sale of such equipment are subject to transaction privilege
tax.
2. If tangible personal
property was purchased as exempt, subsequent nonexempt use shall subject the
gross purchase price to use tax according to statutory provisions.
C. Machinery and equipment used to
facilitate the production of voltage above 34,500 volts shall be categorized as
part of a transmission or distribution system based on the following
definitions.
1. "Transmission system" means:
a. All land, conversion structures, and
equipment employed at a primary source of supply to change the voltage or
frequency of electricity for the purpose of its more efficient or convenient
transmission;
b. All land,
structures, lines, switching and conversion stations, high tension apparatus
and their control and protective equipment between a generating or receiving
point and the entrance to a distribution center or wholesale point;
and
c. All lines and equipment
whose primary purpose is to augment, integrate, or tie together the sources of
power supply.
2.
"Distribution system" means all land, structures, conversion equipment, lines,
line transformers, and other facilities employed between the primary source of
supply and of delivery to customers, which are not includible in a transmission
system whether or not such land, structures, and facilities are operated as
part of a transmission system or as part of a distribution system. Stations
which change electricity from transmission to distribution voltage shall be
classified as distribution stations.
3. "Primary source of supply" means a
generating station or point of receipt in the case of purchased
power.
4. Dual-use equipment shall
be designated as follows:
a. If poles or
towers support both transmission and distribution conductors, the poles,
towers, anchors, guys, and rights-of-way shall be classified as a transmission
system. The conductors, crossarms, braces, grounds, tiewire, insulators, and
other similar tangible personal property shall be classified as transmission or
distribution facilities, according to the purpose for which they are
used.
b. If underground conduit
contains both transmission and distribution conductors, the underground conduit
and the right-of-way shall be classified as a distribution system. The
conductors shall be classified as transmission or distribution facilities
according to the purpose for which they are used.
c. Based on statutory provisions,
transformers and control equipment utilized operationally at transmission
substation sites are considered to be a part of a transmission system and,
therefore, are exempt from transaction privilege and use tax.
D. Machinery,
equipment, or transmission lines for direct use in a transmission system are
only those which are recorded as being part of a transmission system in
accordance with the definitions in subsection (C).
1. Gross receipts from the sale of such
equipment are exempt from the tax.
2. If such machinery and equipment is removed
from inventory to be used as part of a distribution system, the purchase price
is subject to use tax.
