NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10286
SPONSOR: Cusick
 
TITLE OF BILL:
An act to amend the tax law, in relation to establishing a sales tax
exemption for energy storage
 
PURPOSE OR GENERAL IDEA OF BILL:
This legislation would exempt, from state sales and use taxes, retail
sale and installation of energy storage equipment, for both residential
and commercial uses. The legislation would also provide local govern-
ments with the authority to exempt energy storage from local sales and
use taxes.
 
SUMMARY OF PROVISIONS:
Section 1: Amends section 1115 of the tax law by adding subdivisions
(11) and (mm) so that residential energy storage systems equipment and
the service of installing such systems are exempt from state sales and
use taxes.
Sections 2 and 3: Amends section 1210 of the tax law so that local
governments have the option to apply such exemptions locally.
 
JUSTIFICATION:
New York State tax law provides sales and use tax exemptions for a
number of activities, products, and services. Notably, the sale and
installation of residential and commercial solar energy equipment and
commercial fuel cells are exempt from the state sales and use tax and
certain localities have followed suit.
The energy storage energy has attempted to rely on existing sections of
the state tax law to seek a similar exemption from state sales and use
taxes. For example, Section 1115(a)(12) of the tax law provides an
exemption for machinery and equipment for use and consumption directly
and predominantly in the production of electricity by generating.
Section 1105-B of the tax law also exempts parts, tools, and supplies
used in the production of electricity for sale by generating. Receipts
from the services of installing, repairing, maintaining, or servicing
such machinery, equipment, parts, tools, and supplies are exempt from
the tax imposed on these services under section 1105(c)(3).
However, according to an advisory opinion (1) issued by the Department
of Tax and Finance in relation to a specific project, the energy storage
equipment must first be considered a generation facility, and section
1115(a)(12) of the tax law requires that the machinery and equipment be
used directly and predominantly in the production of electricity for
sale by generating. This interpretation is problematic for energy stor-
age which is typically used to inject energy into the energy grid less
than 50 percent of the time. Moreover, energy storage is not considered
generation under Public Service Law, and thus attempting to define it as
generation for the purposes of tax law could create a more complex and
troublesome legal situation in relation to the treatment of storage for
other purposes.
In 2019, New York State codified the most aggressive climate goals in
the nation, requiring New York to achieve 100 percent carbon-free energy
by 2040 (The Climate Leadership and Community Protection Act). In addi-
tion to greenhouse gas reduction goals, the CLCPA requires the state to
have three gigawatts of energy storage installed by 2030.
Energy storage is a key enabling technology to achieve the 'state's
renewable energy and climate goals, providing increased grid flexibili-
ty, enabling the wide scale deployment of renewable energy, promoting
efficient use of grid resources, and enhancing grid resiliency. The
state Public Service Commission recognized the critical role for storage
in its Energy Storage Order adopting the state's roadmap for storage and
authorizing the state Energy Research and Development Authority (NYSER-
DA) to implement new incentive programs for energy storage. While these
efforts have jumpstarted energy storage projects across the state, the
cost of deploying and siting energy storage remains high.
This legislation will help reduce the cost of deploying energy storage
projects by providing an exemption from state taxes for the sale and
installation of energy storage equipment, both residential and commer-
cial, and providing municipalities the option to grant such exemptions
for local sales tax. The legislation will give energy storage technology
similar tax exemptions to solar energy and fuels cells, creating a fair
and level playing field for clean energy technologies while stimulating
the state's economy and creating new green collar jobs.
 
PRIOR LEGISLATIVE HISTORY:
None.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
Undetermined.
 
EFFECTIVE DATE:
Immediately.
STATE OF NEW YORK
________________________________________________________________________
10286
IN ASSEMBLY
April 8, 2020
___________
Introduced by M. of A. CUSICK -- read once and referred to the Committee
on Ways and Means
AN ACT to amend the tax law, in relation to establishing a sales tax
exemption for energy storage
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 1115 of the tax law is amended by adding two new
2 subdivisions (ll) and (mm) to read as follows:
3 (ll) The following shall be exempt from tax under this article: (1)
4 Receipts from the retail sale of, and consideration given or contracted
5 to be given for, or for the use of, residential energy storage systems
6 equipment and the service of installing such systems. For the purposes
7 of this subdivision, "residential energy storage systems equipment"
8 shall mean an arrangement or combination of components installed in a
9 residence that stores electricity for use at a later time to provide
10 heating, cooling, hot water and/or electricity.
11 (2) Receipts from the sale of electricity by a person primarily
12 engaged in the sale of energy storage system equipment and/or electric-
13 ity generated by such equipment pursuant to a written agreement under
14 which such electricity is generated by residential energy system storage
15 equipment that is: (A) owned by a person other than the purchaser of
16 such electricity; (B) installed on residential property of the purchaser
17 of such electricity; and (C) used to provide heating, cooling, hot water
18 or electricity.
19 (mm) The following shall be exempt from tax under this article: (1)
20 Receipts from the retail sale of, and consideration given or contracted
21 to be given for, or for the use of, commercial energy storage systems
22 equipment and the service of installing such systems. For the purposes
23 of this subdivision, "commercial energy storage systems equipment" shall
24 mean an arrangement or combination of components installed upon non-re-
25 sidential premises that stores electricity for use at a later time to
26 provide heating, cooling, hot water and/or electricity. Such arrangement
27 or components shall not include equipment that is part of a non-solar
28 energy system.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD15984-01-0
A. 10286 2
1 (2) Receipts from the sale of electricity by a person primarily
2 engaged in the sale of energy storage system equipment and/or electric-
3 ity generated by such equipment pursuant to a written agreement under
4 which the electricity is generated by commercial energy system equipment
5 that is: (A) owned by a person other than the purchaser of such elec-
6 tricity; (B) installed on the non-residential premises of the purchaser
7 of such electricity; and (C) used to provide heating, cooling, hot water
8 or electricity to such premises.
9 § 2. Paragraph 1 of subdivision (a) of section 1210 of the tax law, as
10 amended by section 2 of part WW and subparagraph (i) as separately
11 amended by section 5 of part Z of chapter 60 of the laws of 2016, is
12 amended to read as follows:
13 (1) Either, all of the taxes described in article twenty-eight of this
14 chapter, at the same uniform rate, as to which taxes all provisions of
15 the local laws, ordinances or resolutions imposing such taxes shall be
16 identical, except as to rate and except as otherwise provided, with the
17 corresponding provisions in such article twenty-eight, including the
18 definition and exemption provisions of such article, so far as the
19 provisions of such article twenty-eight can be made applicable to the
20 taxes imposed by such city or county and with such limitations and
21 special provisions as are set forth in this article. The taxes author-
22 ized under this subdivision may not be imposed by a city or county
23 unless the local law, ordinance or resolution imposes such taxes so as
24 to include all portions and all types of receipts, charges or rents,
25 subject to state tax under sections eleven hundred five and eleven
26 hundred ten of this chapter, except as otherwise provided. (i) Any
27 local law, ordinance or resolution enacted by any city of less than one
28 million or by any county or school district, imposing the taxes author-
29 ized by this subdivision, shall, notwithstanding any provision of law to
30 the contrary, exclude from the operation of such local taxes all sales
31 of tangible personal property for use or consumption directly and
32 predominantly in the production of tangible personal property, gas,
33 electricity, refrigeration or steam, for sale, by manufacturing, proc-
34 essing, generating, assembly, refining, mining or extracting; and all
35 sales of tangible personal property for use or consumption predominantly
36 either in the production of tangible personal property, for sale, by
37 farming or in a commercial horse boarding operation, or in both; and all
38 sales of fuel sold for use in commercial aircraft and general aviation
39 aircraft; and, unless such city, county or school district elects other-
40 wise, shall omit the provision for credit or refund contained in clause
41 six of subdivision (a) or subdivision (d) of section eleven hundred
42 nineteen of this chapter. (ii) Any local law, ordinance or resolution
43 enacted by any city, county or school district, imposing the taxes
44 authorized by this subdivision, shall omit the residential solar energy
45 systems equipment and electricity exemption provided for in subdivision
46 (ee), the commercial solar energy systems equipment and electricity
47 exemption provided for in subdivision (ii), the commercial fuel cell
48 electricity generating systems equipment and electricity generated by
49 such equipment exemption provided for in subdivision (kk), the residen-
50 tial energy storage systems equipment and electricity exemption provided
51 for in subdivision (ll), the commercial energy storage systems equipment
52 and electricity exemption provided for in subdivision (mm) and the
53 clothing and footwear exemption provided for in paragraph thirty of
54 subdivision (a) of section eleven hundred fifteen of this chapter,
55 unless such city, county or school district elects otherwise as to such
56 residential solar energy systems equipment and electricity exemption,
A. 10286 3
1 such commercial solar energy systems equipment and electricity
2 exemption, commercial fuel cell electricity generating systems equipment
3 and electricity generated by such equipment exemption or such clothing
4 and footwear exemption.
5 § 3. Subdivision (d) of section 1210 of the tax law, as amended by
6 section 4 of part WW of chapter 60 of the laws of 2016, is amended to
7 read as follows:
8 (d) A local law, ordinance or resolution imposing any tax pursuant to
9 this section, increasing or decreasing the rate of such tax, repealing
10 or suspending such tax, exempting from such tax the energy sources and
11 services described in paragraph three of subdivision (a) or of subdivi-
12 sion (b) of this section or changing the rate of tax imposed on such
13 energy sources and services or providing for the credit or refund
14 described in clause six of subdivision (a) of section eleven hundred
15 nineteen of this chapter, or electing or repealing the exemption for
16 residential solar equipment and electricity in subdivision (ee) of
17 section eleven hundred fifteen of this article, or the exemption for
18 commercial solar equipment and electricity in subdivision (ii) of
19 section eleven hundred fifteen of this article, or electing or repealing
20 the exemption for commercial fuel cell electricity generating systems
21 equipment and electricity generated by such equipment in subdivision
22 (kk) of section eleven hundred fifteen of this article, or the exemption
23 for residential energy storage equipment or electricity in subdivision
24 (ll) of section eleven hundred fifteen of this article, or the exemption
25 for commercial energy storage equipment and electricity in section (mm)
26 of section eleven hundred fifteen of this article must go into effect
27 only on one of the following dates: March first, June first, September
28 first or December first; provided, that a local law, ordinance or resol-
29 ution providing for the exemption described in paragraph thirty of
30 subdivision (a) of section eleven hundred fifteen of this chapter or
31 repealing any such exemption or a local law, ordinance or resolution
32 providing for a refund or credit described in subdivision (d) of section
33 eleven hundred nineteen of this chapter or repealing such provision so
34 provided must go into effect only on March first. No such local law,
35 ordinance or resolution shall be effective unless a certified copy of
36 such law, ordinance or resolution is mailed by registered or certified
37 mail to the commissioner at the commissioner's office in Albany at least
38 ninety days prior to the date it is to become effective. However, the
39 commissioner may waive and reduce such ninety-day minimum notice
40 requirement to a mailing of such certified copy by registered or certi-
41 fied mail within a period of not less than thirty days prior to such
42 effective date if the commissioner deems such action to be consistent
43 with the commissioner's duties under section twelve hundred fifty of
44 this article and the commissioner acts by resolution. Where the
45 restriction provided for in section twelve hundred twenty-three of this
46 article as to the effective date of a tax and the notice requirement
47 provided for therein are applicable and have not been waived, the
48 restriction and notice requirement in section twelve hundred twenty-
49 three of this article shall also apply.
50 § 4. This act shall take effect immediately.