Sales Tax Exemption - Fuel Cells

The Maryland Clean Energy Incentives Act provides for a sales tax exemption for fuel cells that: (i) generate electricity and heat using an electrochemical process; (ii) have an electricity-only generation efficiency greater than 35%; and (iii) have a generating capacity of at least 2 kW. Under Maryland law, sales tax for many types of heating, ventilation, and air conditioning equipment is charged at the wholesale level and not to the consumer directly. Therefore, in this case, the contractor who installs the fuel cell is the one who would pay the sales tax and, therefore, is eligible to receive the tax exemption. The process for obtaining the tax exemption for the following equipment requires the applicant to submit four documents to the Maryland Comptrollers Office: (1) system components purchased as a package; (2) Invoice from vendor showing sales tax was actually paid; (3) Statement or Certification from manufacturer, vendor or accepted industry rating association showing that the system meets applicable efficiency rating requirements; (4) Comptroller Sales and Use Tax Refund Application (The application form, # COT/ST 205, can be downloaded from the Web site shown above).