Located deep within Florida Statute 212.08(5)(c) lies statutory language that is beneficial to the Combined Heat and Power (CHP) industry as well as those who are seeking to install a CHP system to boost the energy efficiency of their facility.
The purpose of the statutory language is to specify the sales tax exemption eligibility requirements for CHP systems that are installed at large-scale commercial and industrial facilities in Florida. This exemption, applies to machinery and equipment used at a fixed location for the purpose of producing electrical or steam energy resulting from the burning of boiler fuels other than residual oil. Meaning, combined heat and power systems that are fueled by non-residual fuels such as natural gas are eligible for this tax exemption.
However, there are a few statutory stipulations that must be met in order to be eligible for this to exception. For example, the energy derived from the CHP system must be primarily used for manufacturing, processing, compounding or producing sale items of tangible personal property in Florida.
It's also worth noting that the statute allows for facilities that run machinery and equipment on both residual and non-residual fuels to still be eligible, however only the portion on non-residual fuels would be eligible for exemption. Such proration shall be based upon the production of electrical or steam energy from non-residual fuels as a percentage of electrical or steam energy from all fuels. If it is determined that 15 percent or less of all electrical or steam energy generated was produced by burning residual fuel, the full exemption shall apply.
It should be comforting to know that although this exemption was originally set to expire on July 1, 2002 it was extended for three more years. Then, in May 2005, this exception was made permanent upon the enactment of Florida House Bill 805. When the permanent status of this tax benefit is combined with the other benefits of CHP in Florida, such as lower operating costs, lower emissions and higher energy efficiency, CHP is something that all facility managers and business decision makers should consider.
Click on the link below to download the Tax Advantages for Businesses Sales and Use Tax document, Administered in Part by the Fla. Dept. of Revenue.
Tax Advantages for Business Sales and Use Tax
