Multistate Tax Alert: New California Sales and Use Tax Exclusion for “Advanced Manufacturing”
California recently adopted legislation expanding the authority of the California Alternative Energy and Advanced Transportation Financing Authority (“CAEATFA”) to grant a sales and use tax exclusion for the acquisition of machinery and equipment used in an “advanced manufacturing” project. The exclusion applies to tangible personal property placed in service in California and used in certain advanced manufacturing processes or systems. Qualification for the exclusion is discretionary and prospective and will be based on an application that must be submitted to CAEATFA. Importantly, the new law limits the total amount of sales tax exclusions that may be awarded in the aggregate for advanced manufacturing, advanced transportation and alternative source projects to $100 million per calendar year and appears to eliminate the title conveyance/reconveyance requirement set forth in California Revenue and Taxation Code Section 6010.8.
In the attached Tax Alert we summarize the requirements of this new “advanced manufacturing” exclusion.