What's happening
This bill removes the requirement that certain energy used in production must be used "directly and exclusively" to qualify for sales and use tax exemptions.
Why it matters
Expands eligibility for tax exemptions. By removing the requirement that energy must be used "directly and exclusively" in production, more businesses—especially those with mixed-use energy consumption—could qualify for sales and use tax exemptions, potentially lowering operating costs.
Reduces administrative complexity. Businesses and tax authorities may face fewer disputes and less paperwork over what constitutes "direct and exclusive" use, making compliance and enforcement simpler and less costly.
May incentivize broader industrial activity. Sectors that use energy for both production and secondary purposes (like lighting, climate control, or support functions) could now benefit from the exemption, encouraging investment and operational expansion in manufacturing and related industries.
Could impact state tax revenue. By broadening the exemption, the state may collect less in sales and use taxes from energy purchases, which could have budget implications or require adjustments elsewhere.
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Who cares
Manufacturers, processors and assemblers
The bill would broaden the sales and use tax exemption for fuel and utility services used in production for sale by removing the requirement that their use be direct and exclusive.
Energy producers and utilities
Producers of gas, electricity, refrigeration or steam for sale could qualify for exemptions on production fuel and utility services without meeting the direct-and-exclusive-use requirement.
Refineries, mining companies and extraction businesses
The bill would loosen the conditions for exempting fuel and utility services used in their production of goods for sale.
Headline styles
Remove Tax on Industrial Energy
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 59
1 Co-sponsor
History
- Reported and committed to finance
- Referred to energy and telecommunications
- Reported and committed to finance
- Referred to energy and telecommunications
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2513
2017-2018 Regular Sessions
IN SENATE
January 13, 2017
Introduced by Sens. GALLIVAN, FELDER -- read twice and ordered printed, and when printed to be committed to the Committee on Energy and Telecommunications
AN ACT to amend the tax law, in relation to certain exemptions from sales and use taxes
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraph 1 of subdivision (c) of section 1115 of the tax law, as amended by section 7 of part B of chapter 63 of the laws of 2000, is amended to read as follows:
(1) Fuel, gas, electricity, refrigeration and steam, and gas, electric, refrigeration and steam service of whatever nature for use or consumption [directly and exclusively] in the production of tangible personal property, gas, electricity, refrigeration or steam, for sale, by manufacturing, processing, assembling, generating, refining, mining or extracting shall be exempt from the taxes imposed under subdivisions (a) and (b) of section eleven hundred five and the compensating use tax imposed under section eleven hundred ten of this article.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00092-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to certain exemptions from sales and use taxes
Purpose
To incentivize manufacturing in New York while allowing businesses to make efficient use of their resources.
Summary of provisions
Section 1. Amends subdivision (c) of section 1115 of the tax law, as amended by section 7 of part B of chapter 63 of the laws of 2000 by removing the words "directly and exclusively."
Section two provides for an immediate effective date.
Existing law
Energy must be used exclusively and directly for manufacturing in order to be excluded from sales and use taxation.
Justification
Currently, only energy that is used exclusively and directly for manufacturing is excluded from sales and use taxation. The purpose of this exclusion is to encourage manufacturers to locate in and produce goods in New York. However, the existing law's strict limitations run counter to this goal. For example, lighting that is required for workers to see the machines they work on is not excluded from taxation.
The limitation also leads businesses to organize their operations in less than efficient ways. For example, the air conditioning costs to keep computer servers from overheating would no longer be excluded from taxation if a business were to also add a technician's desk into that room. Even though predominantly a manufacturing cost, the addition of one desk causes the air conditioning not to be an exclusively manufacturing expense. This leads to absurd workplace designs and an inefficient use of resources. By removing the exclusive and direct requirements, this bill incentivizes manufacturing in New York while still requiring that tax free energy actively contributes to the manufacturing of goods.
Legislative history
2015-16: S.96 Passed Senate/Referred to Ways and Means
2013-14: S.1441 Committed to Rules
Fiscal implications
None.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.