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A06882 Summary:

BILL NOA06882
 
SAME ASSAME AS S04816
 
SPONSORCahill
 
COSPNSRGonzalez-Rojas, Mitaynes, Simon, Williams, Gottfried, Rosenthal L
 
MLTSPNSR
 
Amd Tax L, generally
 
Relates to tax on sales of motor fuel and petroleum products; repeals certain provisions of law relating thereto.
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A06882 Actions:

BILL NOA06882
 
04/13/2021referred to ways and means
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A06882 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A6882
 
SPONSOR: Cahill
  TITLE OF BILL: An act to amend the tax law, in relation to tax on sales of motor fuel and petroleum products; to repeal paragraph 3 of subdivision (f) and paragraph 4 of subdivision (g) of section 301-a of the tax law, relating to manufacturing gallonage for purposes of the imposition of certain taxes; to repeal subdivisions (i), (j), and (l) of section 301-c of the tax law relating to reimbursement; to repeal section 301-d of the tax law relating to a utility credit or reimbursement; to repeal subdivision (f) of section 301-e of the tax law relating to an aviation fuel busi- ness which services four or more cities; to repeal subparagraph (xi) of paragraph 3 of subdivision (c) of section 1105 of the tax law relating to services rendered with respect to certain property; to repeal para- graph 9 of subdivision (a) of section 1115 of the tax law relating to fuel sold to an airline for use in its airplanes; and to amend the tax law, in relation to making conforming technical changes   PURPOSE: The purpose of the bill is to repeal certain exemptions from sales and use tax and petroleum business tax that encourage the use of fossil fuels.   SUMMARY OF SPECIFIC PROVISIONS: Section 1: Conforming technical change. Section 2: Repeals an exemption from Petroleum Business Tax for manufac- turing using non-highway diesel fuel and residual petroleum product. Section 3: Repeals exemptions from Petroleum Business Tax for kerosene, kero-jet fuel, aviation gasoline, residual petroleum product (bunker fuel), liquefied petroleum gases, and non-highway diesel motor fuel used for nonresidential heating purposes. Section 4: Repeals an exemption from Petroleum Business Tax for sales to the government of New York state. Section 5 and 5-a: Repeals a reimbursement for Petroleum Business Tax paid for non-highway diesel motor fuel used for non-residential heating purposes, and for motor fuel and diesel motor fuel sold to the govern- ment of New York state. Section 6: Repeals a reimbursement for Petroleum Business Tax paid for commercial gallonage, manufacturing gallonage, and gallonage used in mining and extracting. Section 7: Conforming technical change. Section 8: Repeals a credit or reimbursement for Petroleum Business Tax paid for residual petroleum product and non-highway diesel motor fuel used by an electric corporation. Section 9: Conforming technical change. Section 10: Repeals an exemption from Petroleum Business Tax for certain airlines. Section 11: Repeals an exemption from Petroleum Business Tax for commer- cial gallonage. Section 12: Repeals an exemption from Sales and Use Tax for oil and gas production services. Section 13: Unrelated cleanup. Section 14: Repeals an exemption from Sales and Use Tax for airline fuel. Section 15: Repeals an exemption from Sales and Use Tax for gas used in research and development. Section 16: Repeals an exemption from Sales and Use Tax for fuel and gas used in production of tangible personal property. Section 17 and 17-a: Conforming technical changes. Section 18: Unre- lated cleanup. Section 19: Repeals an exemption from Sales and Use Tax for gas used to maintain gas distribution infrastructure. Section 20: Conforming technical changes. Section 21: Conforming Techni- cal Change. Section 22: Effective date.   JUSTIFICATION: New York State spends over $1.5 billion every year on fossil fuel related tax expenditures, distorting the market and subsidizing the use of greenhouse gas-emitting fossil fuels. Some of these tax expenditures may serve a compelling public interest such as offering heating assist- ance to low-income New Yorkers. However, a significant proportion of the spending serves to prop-up outdated industries or reward energy ineffi- ciencies leading to a double cost to taxpayers - once for the direct tax expenditure and again for the environmental damage resulting from the continued burning of fossil fuels. This bill begins the process of aligning New York state tax policy by repealing some of the more egre- gious fossil fuel related tax expenditures. Repeal of these expenditures would save the state roughly $334 million annually, based on information available in the Annual Report on New York State Tax Expenditures, produced by the Division of Budget.   LEGISLATIVE HISTORY: New Bill   FISCAL IMPACT ON THE STATE: Potential savings of over $300 million annually.   EFFECTIVE DATE: This act shall take effect immediately and shall apply to all tax years commencing on or after the first of January next succeeding the date on which it shall have become a law.
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A06882 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          6882
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                     April 13, 2021
                                       ___________
 
        Introduced by M. of A. CAHILL -- read once and referred to the Committee
          on Ways and Means
 
        AN  ACT  to amend the tax law, in relation to tax on sales of motor fuel
          and petroleum products; to repeal paragraph 3 of subdivision  (f)  and
          paragraph 4 of subdivision (g) of section 301-a of the tax law, relat-
          ing  to  manufacturing  gallonage  for  purposes  of the imposition of
          certain taxes; to repeal subdivisions (i), (j),  and  (l)  of  section
          301-c  of  the  tax  law  relating to reimbursement; to repeal section
          301-d of the tax law relating to a utility credit or reimbursement; to
          repeal subdivision (f) of section 301-e of the tax law relating to  an
          aviation  fuel  business which services four or more cities; to repeal
          subparagraph (xi) of paragraph 3 of subdivision (c) of section 1105 of
          the tax law relating to services  rendered  with  respect  to  certain
          property;  to repeal paragraph 9 of subdivision (a) of section 1115 of
          the tax law relating to fuel  sold  to  an  airline  for  use  in  its
          airplanes;  and to amend the tax law, in relation to making conforming
          technical changes

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Subdivision (m) of section 301-a of the tax law, as added
     2  by section 20 of part K of chapter 61 of the laws of 2011, is amended to
     3  read as follows:
     4    (m) Special rate adjustment for certain vessels.  Notwithstanding  any
     5  provision of this section to the contrary, the use of non-highway diesel
     6  motor  fuel  in  the  engine  of a vessel to propel such vessel shall be
     7  subject to tax at the motor fuel and  highway  diesel  motor  fuel  rate
     8  provided  for in this section, and shall be subject to the provisions of
     9  section three hundred one-j of this article,  including  the  adjustment
    10  set  forth  in paragraph [four] three of subdivision (a) of such section
    11  three hundred one-j. A credit or refund shall be available to the extent
    12  tax paid on gallonage used to propel any such vessel exceeds the  amount
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD09108-04-1

        A. 6882                             2
 
     1  of  tax  due  based on the tax rate set forth herein. Provided, however,
     2  that the commissioner shall require such documentary  proof  to  qualify
     3  for  any  credit or reimbursement provided hereunder as the commissioner
     4  deems appropriate.
     5    § 2. Paragraph 3 of subdivision (f) and paragraph 4 of subdivision (g)
     6  of section 301-a of the tax law are REPEALED.
     7    §  3. Subdivisions (a) and (d) of section 301-b of the tax law, subdi-
     8  vision (a) as added by chapter 190 of the laws of 1990, paragraph  5  of
     9  subdivision  (a)  as amended by section 3 of part E of chapter 59 of the
    10  laws of 2012, paragraphs 6, 7 and 8  of  subdivision  (a)  as  added  by
    11  section  4  of part W-1 of chapter 109 of the laws of 2006, and subdivi-
    12  sion (d) as amended by section 21 of part K of chapter 61 of the laws of
    13  2011, are amended to read as follows:
    14    (a) Products. (1) [Kerosene sold or used by a petroleum business which
    15  is registered under article twelve-A of this chapter as a distributor of
    16  diesel motor fuel so long as (i) such product has not  been  blended  or
    17  mixed  with  any  other  product constituting diesel motor fuel or motor
    18  fuel or a residual petroleum product and (ii) such product is  not  used
    19  by  the petroleum business as fuel to operate a motor vehicle or sold by
    20  such petroleum business to a consumer for use as fuel to operate a motor
    21  vehicle.
    22    (2) Kero-jet fuel (i) sold by a petroleum business which is registered
    23  under article twelve-A of this chapter as a distributor of diesel  motor
    24  fuel  to  a  consumer  for  use exclusively as jet aircraft fuel or to a
    25  petroleum business registered under such article twelve-A as a "distrib-
    26  utor of kero-jet fuel only" where such fixed base  operator  is  engaged
    27  solely  in  making or offering to make retail sales not in bulk of kero-
    28  jet fuel directly into the fuel tank of an airplane for the  purpose  of
    29  operating  such  airplane, (ii) used by a petroleum business, registered
    30  under article twelve-A of this chapter as a distributor of diesel  motor
    31  fuel,  exclusively  as jet aircraft fuel, or (iii) sold at retail not in
    32  bulk by a petroleum business registered under article twelve-A  of  this
    33  chapter  as  a  "distributor  of  kero-jet fuel only" where such fuel is
    34  delivered directly into the fuel tank of a jet airplane for use  in  the
    35  operation of such airplane.
    36    (3)  Aviation gasoline, meeting the specifications set forth in Ameri-
    37  can Standard Testing Material Specification D910 or Military  Specifica-
    38  tion  MIL-G-5572,  which  is imported or caused to be imported into this
    39  state by a petroleum business which is registered under article twelve-A
    40  of this chapter as a distributor of motor  fuel  or  produced,  refined,
    41  manufactured or compounded in this state by such a petroleum business.
    42    (4) Residual petroleum product sold by a petroleum business registered
    43  under  this  article  as  a  residual petroleum product business if such
    44  product is sold by such petroleum business to a consumer for use  exclu-
    45  sively  as  bunker  fuel  for vessels or if such product is used by such
    46  petroleum business exclusively as bunker fuel in its own vessels.
    47    (5) Liquefied petroleum gases, such as butane, ethane or propane.
    48    (6)] E85 imported  or  caused  to  be  imported  into  this  state  or
    49  produced,  refined, manufactured or compounded in this state by a petro-
    50  leum business registered under article twelve-A of this  chapter,  as  a
    51  distributor  of motor fuel, and then sold by such petroleum business and
    52  delivered to a filling station and placed in  a  storage  tank  of  such
    53  filling station for such E85 to be dispensed directly into a motor vehi-
    54  cle for use in the operation of such vehicle.
    55    [(7)] (i) Partial B20 exemption. B20 imported or caused to be imported
    56  into this state or produced, refined, manufactured or compounded in this

        A. 6882                             3
 
     1  state  by a petroleum business registered under article twelve-A of this
     2  chapter, as a distributor of diesel motor fuel, and then  sold  by  such
     3  petroleum business.
     4    (ii)  Calculation  of  partial  exemption.  The  amount of the partial
     5  exemption under this paragraph shall be determined  by  multiplying  the
     6  quantity  of  B20 times twenty percent of the applicable taxes otherwise
     7  imposed by this article on such fuel.
     8    [(8)] (2) CNG or hydrogen.
     9    (d) Sales to consumers for heating purposes. [(1)]  Total  residential
    10  heating  exemption.  Non-highway  diesel  motor fuel sold by a petroleum
    11  business registered under article twelve-A of this chapter as a distrib-
    12  utor of diesel motor fuel or residual petroleum product sold by a petro-
    13  leum business registered under this  article  as  a  residual  petroleum
    14  product  business  to  the  consumer exclusively for residential heating
    15  purposes only if such non-highway diesel motor fuel is delivered into  a
    16  storage  tank  which  is  not equipped with a hose or other apparatus by
    17  which such fuel can be dispensed into the fuel tank of a  motor  vehicle
    18  and such storage tank is attached to the heating unit burning such fuel.
    19    [(2) Partial non-residential heating exemption. (A) Non-highway diesel
    20  motor  fuel  sold  by  a  petroleum  business  registered  under article
    21  twelve-A of this chapter as a distributor of diesel motor fuel or  resi-
    22  dual  petroleum  product  sold  by a petroleum business registered under
    23  this article as a residual petroleum product business  to  the  consumer
    24  exclusively for heating, other than residential heating purposes only if
    25  such  non-highway  diesel  motor  fuel  is delivered into a storage tank
    26  which is not equipped with a hose or other apparatus by which such  fuel
    27  can  be dispensed into the fuel tank of a motor vehicle and such storage
    28  tank is attached to the heating unit burning such fuel  (B)  Calculation
    29  of  partial  exemption. The partial exemption under this paragraph shall
    30  be determined by multiplying the quantity of  non-highway  diesel  motor
    31  fuel and residual petroleum product eligible for the exemption times the
    32  sum  of the then current rate of the supplemental tax imposed by section
    33  three hundred one-j of this article and forty-six percent  of  the  then
    34  current  rate  of the tax imposed by section three hundred one-a of this
    35  article, with respect to the specific non-highway diesel motor  fuel  or
    36  residual petroleum product rate, as the case may be.]
    37    §  4.  The  opening  paragraph  and  paragraph 1 of subdivision (c) of
    38  section 301-b of the tax law, as added by chapter 190  of  the  laws  of
    39  1990, are amended to read as follows:
    40    Sales  to  [New York state and] the federal government. (1) Motor fuel
    41  imported or caused to be imported into this state or produced,  refined,
    42  manufactured  or compounded in this state by a petroleum business regis-
    43  tered under article twelve-A of this chapter, as a distributor of  motor
    44  fuel,  and  then  sold  by  such  petroleum  business to an organization
    45  described in paragraph [one or] two of subdivision (a) of section eleven
    46  hundred sixteen of this chapter where such motor fuel is  used  by  such
    47  organization for its own use or consumption.
    48    §  5.  The  opening  paragraph and subdivisions (a) and (b) of section
    49  301-c of the tax law, the opening paragraph as amended by section  5  of
    50  part  W-1 of chapter 109 of the laws of 2006, subdivision (a) as amended
    51  by section 23 of part K of chapter 61 of the laws of  2011, and subdivi-
    52  sion (b) as amended by chapter 330 of the laws of 1991, are  amended  to
    53  read as follows:
    54    A subsequent purchaser shall be eligible for reimbursement of tax with
    55  respect  to the following gallonage, subsequently sold by such purchaser
    56  in accordance with subdivision (a), (b), (e), (h),  [(j),  (k),  (n)  or

        A. 6882                             4

     1  (o)]  (i),  (k)  or  (l)  of  this  section or used by such purchaser in
     2  accordance with subdivision (c), (d), (f), (g)[, (i), (l)] or [(m)]  (j)
     3  of this section, which gallonage has been included in the measure of the
     4  tax imposed by this article on a petroleum business:
     5    (a)  [Non-highway  Diesel  motor  fuel used for heating purposes. (1)]
     6  Total residential heating reimbursement. Non-highway Diesel  motor  fuel
     7  purchased in this state and sold by such purchaser to a consumer for use
     8  exclusively  for  residential  heating  purposes but only where (i) such
     9  non-highway diesel motor fuel is delivered into a storage tank which  is
    10  not  equipped  with  a hose or other apparatus by which such non-highway
    11  Diesel motor fuel can be dispensed into the fuel tank of a motor vehicle
    12  and such storage tank is attached to the heating unit burning such  non-
    13  highway Diesel motor fuel, (ii) the tax imposed pursuant to this article
    14  has been paid with respect to such non-highway diesel motor fuel and the
    15  entire amount of such tax has been absorbed by such purchaser, and (iii)
    16  such  purchaser  possesses documentary proof satisfactory to the commis-
    17  sioner evidencing the absorption by it of the entire amount of  the  tax
    18  imposed  pursuant  to  this article. Provided, however, that the commis-
    19  sioner is authorized, in the event that the commissioner determines that
    20  it would not threaten the integrity of the administration  and  enforce-
    21  ment of the tax imposed by this article, to provide a reimbursement with
    22  respect  to a retail sale to a consumer for residential heating purposes
    23  of less than ten gallons of non-highway diesel motor fuel provided  such
    24  fuel is not dispensed into the tank of a motor vehicle.
    25    [(2)  Partial  non-residential  heating reimbursement. (A) Non-highway
    26  Diesel motor fuel purchased in this state and sold by such purchaser  to
    27  a  consumer  for use exclusively for heating, other than for residential
    28  heating purposes, but only where (i) such non-highway diesel motor  fuel
    29  is  delivered  into  a storage tank which is not equipped with a hose or
    30  other apparatus by which such  non-highway  Diesel  motor  fuel  can  be
    31  dispensed into the fuel tank of a motor vehicle and such storage tank is
    32  attached to the heating unit burning such non-highway Diesel motor fuel,
    33  (ii) the tax imposed pursuant to this article has been paid with respect
    34  to  such non-highway diesel motor fuel and the entire amount of such tax
    35  has been absorbed by such purchaser, and (iii) such purchaser  possesses
    36  documentary  proof  satisfactory  to  the  commissioner  evidencing  the
    37  absorption by it of the entire amount of the  tax  imposed  pursuant  to
    38  this article.
    39    (B)  Calculation  of  partial reimbursement. Notwithstanding any other
    40  provision of this article, the amount of the  reimbursement  under  this
    41  paragraph shall be determined by multiplying the quantity of non-highway
    42  diesel  motor  fuel  eligible for the reimbursement times the sum of the
    43  then current rate of the  supplemental  tax  imposed  by  section  three
    44  hundred  one-j of this article and forty-six percent of the then current
    45  rate of the tax imposed by section three hundred one-a of this  article,
    46  with  respect to the non-highway diesel motor fuel rate, as the case may
    47  be.]
    48    (b) Sales to [New York state and] the federal government.  Motor  fuel
    49  and diesel motor fuel purchased in this state and sold by such purchaser
    50  in  this state to an organization described in paragraph [one or] two of
    51  subdivision (a) of section eleven hundred sixteen of this chapter  where
    52  (i)  such motor fuel or diesel motor fuel is for such organization's own
    53  use or consumption, (ii) the tax imposed pursuant to  this  article  has
    54  been  paid  with respect to such motor fuel or diesel motor fuel and the
    55  entire amount of such tax has been absorbed by such purchaser and, (iii)
    56  such purchaser possesses documentary proof satisfactory to  the  commis-

        A. 6882                             5
 
     1  sioner  of  taxation  and finance evidencing the absorption by it of the
     2  entire amount of the tax imposed pursuant  to  this  article.  Provided,
     3  however,  that  the commissioner [of taxation and finance] shall require
     4  such  documentary proof to qualify for any reimbursement of tax provided
     5  by this section as the commissioner  deems  appropriate,  including  the
     6  expansion  of any certification required pursuant to section two hundred
     7  eighty-five-a or two hundred eighty-five-b of this chapter to cover  the
     8  taxes imposed pursuant to this article.
     9    §  5-a.  The  opening  paragraph  of  section 301-c of the tax law, as
    10  amended by chapter 468 of the laws  of  2000,  is  amended  to  read  as
    11  follows:
    12    A subsequent purchaser shall be eligible for reimbursement of tax with
    13  respect  to the following gallonage, subsequently sold by such purchaser
    14  in accordance with subdivision (a), (b), (e), (h) [,(j)] or [(k)] (i) of
    15  this section or used by such purchaser in  accordance  with  subdivision
    16  (c),  (d),  (f),  (g)[,  (i),  (l)]  or [(m)] (j) of this section, which
    17  gallonage has been included in the measure of the tax  imposed  by  this
    18  article on a petroleum business:
    19    § 6. Subdivisions (i), (j) and (l) of section 301-c of the tax law are
    20  REPEALED.
    21    §  7.  Subdivisions (k), (m), (n), (o) and (p) of section 301-c of the
    22  tax law are redesignated subdivisions (i), (j), (k), (l) and (m).
    23    § 8. Section 301-d of the tax law is REPEALED.
    24    § 9. Paragraph 4 of subdivision (e) of section 301-e of the  tax  law,
    25  as  added  by  chapter  190  of  the laws of 1990, is amended to read as
    26  follows:
    27    (4) "aviation fuel" means kero-jet fuel  and  aviation  gasoline  [(as
    28  described in paragraph three of subdivision (a) of section three hundred
    29  one-b of this article)] meeting the specifications set forth in American
    30  Standard  Testing  Material Specification D910 or Military Specification
    31  MIL-G-5572. Provided, further the term kero-jet shall not include  naph-
    32  tha  based aviation fuel refined and used solely for propelling military
    33  jet airplanes of the United States Armed Forces.
    34    § 10. Subdivision (f) of section 301-e is REPEALED.
    35    § 11. Subdivision (a) of section 301-j of the tax law, as  amended  by
    36  chapter  309 of the laws of 1996, paragraphs 1, 2, 3 and 4 as amended by
    37  section 29 of part K of chapter 61 of the laws of 2011,  is  amended  to
    38  read as follows:
    39    (a)  Imposition  of  tax.    (1)  In  addition to the taxes imposed by
    40  sections three hundred one-a and three hundred one-e  of  this  article,
    41  there  is  hereby  imposed  upon every petroleum business subject to tax
    42  imposed under section three hundred one-a  of  this  article  and  every
    43  aviation fuel business subject to the aviation gasoline component of the
    44  tax imposed under section three hundred one-e of this article, a supple-
    45  mental  monthly tax for each or any part of a taxable month at a rate of
    46  six and eight-tenths cents per  gallon  with  respect  to  the  products
    47  included  in  each  component of the taxes imposed by such section three
    48  hundred one-a and the aviation gasoline component of the tax imposed  by
    49  such section three hundred one-e of this article.
    50    (2)  [Provided,  however,  "commercial  gallonage,"  as  such  term is
    51  defined in subdivision (k) of section three  hundred  of  this  article,
    52  shall be exempt from the measure of the tax imposed under this section.
    53    (3)]  Provided, further, "railroad diesel," as such term is defined in
    54  subdivision (l) of section three  hundred  of  this  article,  shall  be
    55  exempt from the measure of the tax imposed under this section.

        A. 6882                             6

     1    [(4)]  (3)  Provided,  further, a separate per gallon rate shall apply
     2  with respect to highway diesel motor fuel. Such rate shall be determined
     3  by taking the adjusted rate per gallon of tax  imposed  under  paragraph
     4  one  of this subdivision as adjusted in accordance with paragraph [five]
     5  four  of  this subdivision and subtracting therefrom one and three-quar-
     6  ters cents.  Commencing January first, two  thousand  twelve,  and  each
     7  January  thereafter,  the  per  gallon rate applicable to highway diesel
     8  motor fuel shall be the adjusted rate under paragraph one of this subdi-
     9  vision as adjusted in accordance with  paragraph  [five]  four  of  this
    10  subdivision  which  commences  on such date minus one and three-quarters
    11  cents. The resulting rate under this paragraph  shall  be  expressed  in
    12  hundredths of a cent.
    13    [(5)]  (4)  Except  as  herein  provided,  the  tax imposed under this
    14  section shall be calculated in the same respective manner as  the  taxes
    15  imposed  by  section three hundred one-a and section three hundred one-e
    16  of this article. Except [for section three hundred one-d and except]  as
    17  otherwise  provided  in this section, all the provisions of this article
    18  applicable to the taxes imposed by  sections  three  hundred  one-a  and
    19  three  hundred  one-e  of  this article, shall apply with respect to the
    20  supplemental tax imposed by this section to the same  extent  as  if  it
    21  were respectively imposed by such sections.
    22    §  12.  Subparagraphs  (ix)  and (x) of paragraph 3 and paragraph 5 of
    23  subdivision (c) of section 1105 of the tax  law,  subparagraph  (ix)  of
    24  paragraph  3  as  added by chapter 395 of the laws of 1998, subparagraph
    25  (x) of paragraph 3 as added by section 1 of part FF of  chapter  407  of
    26  the  laws of 1999, and paragraph 5 as amended by chapter 321 of the laws
    27  of 2005, are amended to read as follows:
    28    (ix) [such services rendered with respect to tangible property used or
    29  consumed directly and predominantly in the production for sale of gas or
    30  oil by  manufacturing,  processing,  generating,  assembling,  refining,
    31  mining, or extracting.
    32    (x)]  such  services  rendered  with  respect to property described in
    33  paragraph twelve-a of subdivision (a) of section eleven hundred  fifteen
    34  of this article.
    35    (5)  Maintaining,  servicing  or  repairing real property, property or
    36  land, as such terms are defined in the real property  tax  law,  whether
    37  the services are performed in or outside of a building, as distinguished
    38  from  adding  to or improving such real property, property or land, by a
    39  capital improvement as such term capital improvement is defined in para-
    40  graph nine of subdivision (b) of section  eleven  hundred  one  of  this
    41  article, but excluding (i) services rendered by an individual who is not
    42  in a regular trade or business offering his services to the public, (ii)
    43  [services  rendered  directly with respect to real property, property or
    44  land used or consumed directly and predominantly in the  production  for
    45  sale of gas or oil by manufacturing, processing, generating, assembling,
    46  refining,  mining,  or extracting, (iii)] services rendered with respect
    47  to real property, property or land used or consumed predominantly either
    48  in the production of tangible personal property, for sale, by farming or
    49  in a commercial horse boarding operation, or in both  and  [(iv)]  (iii)
    50  services  of  removal  of  waste material from a facility regulated as a
    51  transfer station or construction and demolition debris processing facil-
    52  ity by the department of environmental conservation, provided  that  the
    53  waste material to be removed was not generated by the facility.
    54    §  13.  Subparagraph (xi) of paragraph 3 of subdivision (c) of section
    55  1105 of the tax law is REPEALED.

        A. 6882                             7
 
     1    § 14. Paragraph 9 of subdivision (a) of section 1115 of the tax law is
     2  REPEALED.
     3    §  15.  Paragraph  (ii)  of subdivision (b) of section 1115 of the tax
     4  law, as amended by section 30 of part Y of chapter 63  of  the  laws  of
     5  2000, is amended to read as follows:
     6    (ii)  [Gas,  electricity]  Electricity,  refrigeration  and steam, and
     7  [gas,] electric, refrigeration and steam service of whatever nature  for
     8  use  or consumption directly and exclusively in research and development
     9  in the experimental or laboratory sense shall be  exempt  from  the  tax
    10  imposed  under  subdivision  (b)  of section eleven hundred five and the
    11  compensating use tax imposed under section eleven hundred  ten  of  this
    12  article.  Such  research  and development shall not be deemed to include
    13  the ordinary testing or inspection of materials or products for  quality
    14  control,  efficiency  surveys,  management  studies,  consumer  surveys,
    15  advertising, promotions or research in connection with literary, histor-
    16  ical or similar projects.
    17    § 16. Paragraph 1 of subdivision (c) of section 1115 of the  tax  law,
    18  as  amended by section 7 of part B of chapter 63 of the laws of 2000, is
    19  amended to read as follows:
    20    (1) [Fuel, gas, electricity] Electricity, refrigeration and steam, and
    21  [gas,] electric, refrigeration and steam service of whatever nature  for
    22  use  or consumption directly and exclusively in the production of tangi-
    23  ble personal property, [gas,] electricity, refrigeration or  steam,  for
    24  sale,  by  manufacturing,  processing, assembling, generating, refining,
    25  mining or extracting shall be exempt from the taxes imposed under subdi-
    26  visions (a) and (b) of section eleven hundred five and the  compensating
    27  use tax imposed under section eleven hundred ten of this article.
    28    §  17.  Subdivision  (j) of section 1115 of the tax law, as amended by
    29  section 41 of part K of chapter 61 of the laws of 2011,  is  amended  to
    30  read as follows:
    31    (j) The exemptions provided in this section shall not apply to the tax
    32  required  to  be  prepaid  pursuant  to the provisions of section eleven
    33  hundred two of this article nor to the taxes imposed by sections  eleven
    34  hundred  five  and  eleven  hundred  ten of this article with respect to
    35  receipts from sales and uses of motor fuel or diesel motor fuel, [except
    36  that the exemptions provided in paragraphs nine and forty-two of  subdi-
    37  vision (a) of this section shall apply to the tax required to be prepaid
    38  pursuant to the provisions of section eleven hundred two of this article
    39  and  to  the  taxes  imposed  by sections eleven hundred five and eleven
    40  hundred ten of this article with respect to sales and uses  of  kero-jet
    41  fuel,]  CNG,  hydrogen and E85, provided, however, the exemption allowed
    42  for E85 shall be subject to  the  additional  requirements  provided  in
    43  section  eleven  hundred  two  of  this article with respect to E85. The
    44  exemption provided in subdivision (c) of this  section  shall  apply  to
    45  sales  and uses of non-highway diesel motor fuel but only if all of such
    46  fuel is consumed other than on the public highways of  this  state.  The
    47  exemption  provided  in  subdivision  (c) of this section shall apply to
    48  sales and uses of non-highway diesel motor fuel for use  or  consumption
    49  either in the production for sale of tangible personal property by farm-
    50  ing  or in a commercial horse boarding operation, or in both but only if
    51  all of such fuel is consumed other than on the public highways  of  this
    52  state (except for the use of the public highways to reach adjacent farm-
    53  lands  or  adjacent lands used in a commercial horse boarding operation,
    54  or both).

        A. 6882                             8
 
     1    § 17-a. Subdivision (j) of section 1115 of the tax law, as amended  by
     2  section  41-a of part K of chapter 61 of the laws of 2011, is amended to
     3  read as follows:
     4    (j) The exemptions provided in this section shall not apply to the tax
     5  required  to  be  prepaid  pursuant  to the provisions of section eleven
     6  hundred two of this article nor to the taxes imposed by sections  eleven
     7  hundred  five  and  eleven  hundred  ten of this article with respect to
     8  receipts from sales and uses of motor fuel or diesel motor fuel[, except
     9  that the exemption provided in paragraph nine of subdivision (a) of this
    10  section shall apply to the tax required to be prepaid  pursuant  to  the
    11  provisions  of  section  eleven  hundred  two of this article and to the
    12  taxes imposed by sections eleven hundred five and eleven hundred ten  of
    13  this  article  with  respect  to  sales  and uses of kero-jet fuel]. The
    14  exemption provided in subdivision (c) of this  section  shall  apply  to
    15  sales  and uses of non-highway diesel motor fuel but only if all of such
    16  fuel is consumed other than on the public highways of  this  state.  The
    17  exemption  provided  in  subdivision  (c) of this section shall apply to
    18  sales and uses of non-highway diesel motor fuel for use  or  consumption
    19  either in the production for sale of tangible personal property by farm-
    20  ing  or in a commercial horse boarding operation, or in both but only if
    21  all of such fuel is consumed other than on the public highways  of  this
    22  state (except for the use of the public highways to reach adjacent farm-
    23  lands  or  adjacent lands used in a commercial horse boarding operation,
    24  or both).
    25    § 18. Subdivision (s) of section 1115 of the  tax  law,  as  added  by
    26  chapter 201 of the laws of 1995, is redesignated subdivision (p).
    27    §  19.  Subdivision  (w)  of  section 1115 of the tax law, as added by
    28  section 32 of part Y of chapter 63 of the laws of 2000,  is  amended  to
    29  read as follows:
    30    (w)  Receipts  from the sale of [gas or] electricity or [gas or] elec-
    31  tric service of whatever nature and consideration given or contracted to
    32  be given for, or for the use of, [gas or] electricity or [gas or]  elec-
    33  tric service of whatever nature purchased for use or consumption direct-
    34  ly  and  exclusively  to  provide  [gas or] electric service of whatever
    35  nature consisting of operating [a gas pipeline or gas distribution  line
    36  or]  an  electric  transmission  or  distribution line [and ensuring the
    37  necessary working pressure in an underground gas storage facility] shall
    38  be exempt from sales and compensating use taxes imposed by this article.
    39  Such exempt [gas or] electricity or [gas or] electric service of whatev-
    40  er nature shall include, but shall not be  limited  to,  such  [gas  or]
    41  electricity  or  [gas  or]  electric  service of whatever nature used or
    42  consumed directly and exclusively to (1) [ensure necessary working pres-
    43  sure in a gas pipeline used to transport, transmit  or  distribute  gas,
    44  (2)  operate  compressors  used to transport, transmit or distribute gas
    45  through such a gas pipeline or  distribution  line  or  used  to  ensure
    46  necessary working pressure in such a storage facility, (3) operate heat-
    47  ers  to  prevent gas in such a pipeline or distribution line from freez-
    48  ing, (4) operate equipment which removes impurities  and  moisture  from
    49  gas  in  such  a pipeline or distribution line, (5)] operate substations
    50  and equipment related to electric transmission  and  distribution  lines
    51  such   as  transformers,  capacitors,  meters,  switches,  communication
    52  devices and heating and cooling equipment,  and  [(6)]  (2)  ensure  the
    53  reliability  of  electricity or electric service transmitted or distrib-
    54  uted through such lines, for  example,  by  operating  reserve  capacity
    55  machinery and equipment.

        A. 6882                             9
 
     1    §  20.  Subdivision  (k)  of section 300 of the tax law, as amended by
     2  section 17 of part K of chapter 61 of the laws of 2011,  is  amended  to
     3  read as follows:
     4    (k)  "Commercial  gallonage"  means gallonage (1) which is non-highway
     5  diesel motor fuel or residual petroleum product, (2) [which is  included
     6  in  the  full  measure of the non-highway diesel motor fuel component or
     7  the residual petroleum  product  component  of  the  tax  imposed  under
     8  section  three  hundred  one-a of this article, (3)] which does not (and
     9  will not) qualify [(A) for the utility credit or reimbursement  provided
    10  for  in  section three hundred one-d of this article, (B)] (A) as "manu-
    11  facturing gallonage", as such term is defined in subdivision (m) of this
    12  section, [(C)] or (B)  for  the  not-for-profit  organization  exemption
    13  provided  for  in subdivision (h) of section three hundred one-b of this
    14  article, [or (D) for the heating exemption provided for in paragraph two
    15  of subdivision (d) of section three hundred one-b of this article or the
    16  heating reimbursement provided for in paragraph two of  subdivision  (a)
    17  of  section  three  hundred  one-c of this article,] and [(4)] (3) which
    18  will not be used nor has been used in the fuel tank connecting with  the
    19  engine of a vessel. No gallonage shall qualify as "commercial gallonage"
    20  where  such  gallonage  is  eligible  for  the  [(i)  utility  credit or
    21  reimbursement under such section three hundred one-d  of  this  article,
    22  (ii)  "manufacturing exemption" under paragraph three of subdivision (f)
    23  of section three hundred one-a of this  article,  (iii)]  not-for-profit
    24  organization  exemption  under  subdivision (h) of section three hundred
    25  one-b of this article[, or (iv) heating exemption provided for in  para-
    26  graph  two  of  subdivision  (d)  of section three hundred one-b of this
    27  article or the heating reimbursement provided for in  paragraph  two  of
    28  subdivision  (a)  of  section  three hundred one-c of this article]. The
    29  commissioner shall require such documentary proof  to  substantiate  the
    30  classification  of product as "commercial gallonage" as the commissioner
    31  deems appropriate.
    32    § 21. Paragraph 1 of subdivision (f) of section 301-b of the tax  law,
    33  as amended by section 21 of part K of chapter 61 of the laws of 2011, is
    34  amended to read as follows:
    35    (1)  Residual petroleum product and non-highway diesel motor fuel sold
    36  to an electric corporation, [as described in subdivision (a) of  section
    37  three hundred one-d of this article,] as defined in subdivision thirteen
    38  of  section two of the public service law, subject to the supervision of
    39  the department of public service, which is registered with  the  depart-
    40  ment  as a petroleum business tax direct pay permittee, and used by such
    41  electric corporation to fuel generators for the purpose of manufacturing
    42  or producing electricity where such electric corporation provides a copy
    43  of a direct pay permit authorized and issued by the commissioner, to the
    44  petroleum business making such sale. If so registered, such  corporation
    45  shall be a taxpayer under this article and (i) such electric corporation
    46  shall  file a return monthly and pay the applicable tax under this arti-
    47  cle, after the application of allowable credits, on all  such  purchases
    48  directly  to  the  commissioner, (ii) such electric corporation shall be
    49  subject to all of the provisions of this article relating to the respon-
    50  sibilities and liabilities of taxpayers under this article with  respect
    51  to such residual petroleum product and non-highway diesel motor fuel.
    52    §  22.  This  act shall take effect immediately and shall apply to all
    53  tax years commencing on or after the first of  January  next  succeeding
    54  the date on which it shall have become a law; provided, however, that:
    55    (a)  the  amendments  to  paragraphs  6, 7 and 8 of subdivision (a) of
    56  section 301-b made by section three of this act  shall  not  affect  the

        A. 6882                            10
 
     1  expiration  and repeal of such paragraphs and shall expire and be deemed
     2  repealed therewith;
     3    (b)  the  amendments  to the opening paragraph of section 301-c of the
     4  tax law as made by section five of this act  shall  be  subject  to  the
     5  expiration  and  reversion  of  such paragraph pursuant to section 19 of
     6  part W-1 of chapter 109 of the laws of 2006, as amended, when upon  such
     7  date the provisions of section five-a of this act shall take effect;
     8    (c)  the  amendments to subdivisions (n) and (o) of section 301-c made
     9  by section seven of this act shall not affect the expiration and  repeal
    10  of  such subdivisions and shall expire and be deemed repealed therewith;
    11  and
    12    (d) the amendments to subdivision (j) of section 1115 of the  tax  law
    13  made by section seventeen of this act shall be subject to the expiration
    14  and  reversion of such subdivision pursuant to section 19 of part W-1 of
    15  chapter 109 of the laws of 2006, as amended, when  upon  such  date  the
    16  provisions of section seventeen-a of this act shall take effect.
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