Sales Tax on Electric Cars

May 2021

New York State is pushing hard to get away from gas powered vehicles and make the move to electric vehicles. The State already has over 35,000 electric vehicles on the road. There has been a proposed bill in the Senate that would require all of New York State’s sales of new cars and trucks to be zero emissions by 2035. There is also currently a rebate on the purchase of a new electric vehicle.

The push to electric vehicles has even permeated the sales tax arena. On October 27, 2020, the New York State Tax Department issued an Advisory Opinion on whether the sale of hydrogen gas at hydrogen refueling stations for electric vehicles were subject to sales tax. The Tax Department explained that a law was previously passed that exempted the sale of hydrogen for use and consumption directly and exclusively in the engine of a motor vehicle. Therefore, the sale of hydrogen gas at refueling stations is not subject to sales tax.

Furthermore, a bill was introduced in the New York Senate that would exempt from State sales tax the sale of the first $35,000 for a battery, electric, or plug-in hybrid electric vehicle. Counties and cities would have the option to adopt the same incentive but would not be required to do so.

While not vehicle related but along the same lines of moving towards renewable energy sources, an Advisory Opinion also issued on October 27 discusses residential solar energy systems. The Tax Department states that retail sales and installations of residential and commercial solar energy systems equipment are exempt from State sales tax. These sales and installations are exempt from local sales tax only if the jurisdiction enacted the exemption.

It looks like the State is really trying to incentive the use of renewable resources. If your business is in renewable resources and want to know the sales tax rules, contact Sales Tax Defense! YOU MIGHT BE ENTITLED TO A SUBSTANTIAL REFUND OF SALES TAX ON SOME OF YOUR PURCHASES!

Success Story

Dry Cleaning Business

An accountant was representing a laundry/dry-cleaning/linen business on its sales tax audit. The accountant was doing a great job but got stuck on one issue. In addition to dry-cleaning uniforms and linens, the company also dry-cleaned mats. The auditor and her supervisor argued that the company was not dry-cleaning mats, it was renting mats, and then switched to arguing that it was not nontaxable dry-cleaning but rather taxable cleaning.

The accountant and the company came to Sales Tax Defense to assist with this one last issue. We researched case law and guidance which we presented to the auditor and supervisor. We had several conference calls, arguing our point. After weeks of back and forth, the Tax Department finally conceded and held that the dry-cleaning of mats was nontaxable.

It’s a fight…but this is what we do!