Laws, Regulations and Annotations
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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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346.0000 Manufacturing and Research and Development Equipment—Regulation 1525.4
Annotation 346.0005
346.0005 Hydrogen Fueling Station. Hydrogen refueling stations are fully automated facilities used in refueling hydrogen fuel cell vehicles. Before the hydrogen gas purchased from a supplier can be used to refuel a vehicle, it must be pressurized from 3,000 psi to 13,500 psi and be processed through a filtration system to remove a minute amount of contaminates. When a vehicle plugs into a fuel pump, the hydrogen must be passed through a cooling system, which cools the hydrogen gas to -40 degrees Fahrenheit. The stations only make sales to consumers by pumping the hydrogen gas directly into their vehicles.
Under Regulation 1525.4, a qualified person includes a person that is primarily engaged in those manufacturing lines of business described in Codes 3111 to 3399 of the North American Industry Classification System published by the United States Office of Management and Budget, 2012 edition (NAICS Codes). Being "primarily engaged" generally means that, in the prior financial year, the person derives 50 percent or more of gross revenue from, or expends 50 percent or more of operating expenses in, a line of business described in a qualifying NAICS Code.
Hydrogen fueling stations are in the business of selling hydrogen gas at retail by dispensing the fuel directly into consumers' vehicles, a line of business that appears to be described in a non-qualifying NAICS Code (either 447190 or 454310). The stations change the temperature, pressure, and purity of the hydrogen gas in preparation for and while dispensing the hydrogen gas at retail. Therefore, these actions do not constitute a separate line of business of the hydrogen stations. As such, the gross revenue or operating expense related to these actions is associated with the stations’ retailing line of business for the purposes of the "primarily engaged" test. 3/12/21.