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New York Sales and Use Tax: Residential Energy Sources

  • Sep 19, 2012 | Gail Cole

New York has recently updated exemptions for residential energy sources and services.

New York State Tax Bulletin TB-ST-775, dated September 17, 2012, states "[s]ales and uses of energy sources and services for residential purposes are exempt from state sales and use taxes and possibly local taxes."

State sales and use tax exemption

When used for residential purposes, the following energy sources and services are exempt from the Metropolitan Commuter Transportation District 4% sales and use taxes:

  • natural gas
  • propane sold in containers of 100 pounds or more
  • electricity
  • steam
  • fuel oil
  • non-highway diesel motor fuel (eligible for a refund of sales tax paid)
  • coal
  • wood (including wood pellets and other compressed wood products) used for heating purposes only
  • gas, electric, and steam services.

Local sales and use taxes

Localities have the right to levy local sales and use taxes on residential energy sources exempt from New York state sales and use taxes. According to the tax bulletin, some "localities exempt residential energy sources and services from tax, while others impose tax at a full or reduced rate."

Furthermore, "school districts may also impose sales tax on these energy sources and services." A list of the local sales and use tax rates on residential energy sources and services that came into effect September 1, 2012 may be found in Publication 718-R.

Mixed-use properties

The exemption also pertains to the portion of mixed-use properties used for residential purposes, defined as "the use of any part of a structure by a person as a place to live." The percentage of residential use is the square footage of residential use (excluding common areas) divided by the total square footage of structure (excluding common areas).

"If the percentage of residential use is 75% or more, the exemption from state and MCTD taxes… will apply to %100 of the energy sources or services purchased for the property." Form TP-385, Certification of Residential Use of Energy Purchases, must be used to claim an exemption for mixed-use properties.

Tax Bulletin TB-ST-775 concludes with the warning that "taxpayers should be aware that subsequent changes in the Tax Law or its interpretation may affect the accuracy of a Tax Bulletin."

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.