Bill > S1205

Introduced Session

This bill provides an exemption from the sales and use tax for sales of fuel cell devices and systems, and sales of tangible personal property powered by fuel cells. The bill also exempts from the tax sales of natural gas (and utility service) that is used as a fuel in a fuel cell device or system, and sales of electricity generated by a fuel cell. In general, fuel cells are devices or systems that use a source of fuel, such as hydrogen, and an oxidant to generate electricity through an electrochemical reaction without combustion. The electricity generated by fuel cells is clean, safe, and reliable, and can be depended upon to provide electrical power for a wide variety of residential, industrial, and commercial applications, including vehicles and material handling equipment, back-up or emergency electricity generation units, and off-grid power stations for homes, businesses, and utilities. In today's marketplace, fuel cells have significant advantages over combustion-based technologies and conventional batteries. Most notably, fuel cells produce much smaller quantities of greenhouse gases (and none of the air pollutants that create smog and cause health problems), and unlike batteries, which eventually go dead and must be recharged, fuel cells provide a steady stream of electricity so long as the fuel and oxidant involved in the electrochemical reaction are supplied. This bill provides tax breaks under the sales and use tax to recognize these benefits and encourage the continued deployment of fuel cell technologies in this State. Under the bill, the current exemption for solar energy devices and systems is expanded to exempt sales of fuel cell devices and systems designed to provide heating or cooling, or electrical or mechanical power by converting the chemical energy of a fuel and an oxidant into electricity through a non-combustive electrochemical process. In doing so, the bill exempts from tax sales of mechanical or chemical devices used to store fuel cell-generated energy. The bill also provides a stand-alone exemption from the sales and use tax for sales of tangible personal property powered directly and exclusively by a fuel cell device or system that is designed to provide heating or cooling, or electrical or mechanical power to the tangible personal property as an integrated, component part of the tangible personal property. Under the bill, this exemption is included to ensure vehicles and material handling equipment (not already exempt from tax under the exemption for sales of zero-emission vehicles), electronic devices, and other consumer and commercial products that rely on an embedded fuel cell for electrical power are permitted to be sold tax free. In addition, the bill amends the sales and use tax to exempt from the tax sales of natural gas (and utility service) that is used as a fuel in a fuel cell device or system, and sales of electricity generated by a fuel cell. Hydrogen, the fuel most commonly used in fuel cells, is often created from natural gas, which is the cleanest burning fossil fuel. The bill takes effect immediately upon enactment and provides for the sales and use tax exemptions to apply to sales made, uses occurring, and billing periods starting on or after the first day of the fourth month next following the date of enactment.

AI Summary

Committee Categories

Richard Codey (D)*,  Bob Smith (D)*,  Linda Greenstein (D), 

Reviewed by the Sales Tax Review Commission Recommend to not enact (on 03/28/2018)