While we’re busy changing light bulbs and discovering more and more renewable energy sources, sales tax issues related to green energy recently hit New York State.

The case, as Bob Dylan once sang, is “blowin’ in the wind.” It involved BP Wind Energy North America, who wanted to know whether construction and installation of a commercial wind farm on leased premises was considered a capital improvement and subject to sales tax.

The Commissioner of the New York State Department of Taxation and Finance concluded that “installations of BP’s equipment on leased property, pursuant to the terms of its lease agreement, do not constitute a capital improvement to the leased premises. However, the assembly and installation of its wind generation equipment used directly and predominantly in the generation of electricity for sale may nonetheless qualify for exemption from sales tax pursuant to the provisions of sections 1115(a)(12), 1105(c)(3) and 1105-B of the Tax Law.”

However, the opinion states, “Purchases and leases of construction tools and equipment for use by Petitioner, its contractors, or subcontractors in constructing and erecting the facility are subject to sales tax.”