Could a renewable-natural-gas plant's owner and contractors buy qualifying equipment tax-free under Florida TAA 25A-002?

Plain-English summary

The taxpayer planned to manufacture renewable natural gas from landfill gas at a new plant and sell the output at wholesale to a gas utility company for resale.

The taxpayer, its contractor, and its subcontractors could purchase the machinery, equipment, and integral building materials identified as items 1, 3 through 15, and 17 through 18 in the advisement without Florida sales and use tax under section 212.08(5)(v).

The taxpayer, contractor, or subcontractor could issue an exemption affidavit certifying that an eligible purchase qualified for the renewable-natural-gas equipment exemption.

What this means for you

The exemption was item-specific and supported by an affidavit. The TAA did not say every input or construction purchase for the plant was exempt.

Common questions

Could contractors use the exemption? Yes, for the listed qualifying items.

What document supported an exempt purchase? A tax exemption affidavit certifying eligibility.

Could the parties rely on the TAA? It bound the Department only under the described facts and circumstances.

Citations and references

• Fla. Stat. §§ 212.02, 212.05, 212.055, and 212.08(5)(v) and Fla. Admin. Code r. 12A-1.096, as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 25A-002

Original ruling text

QUESTIONS:

1. Whether Taxpayer, contractor and subcontractors, will be able to purchase the
   equipment and integral building materials to construct the Renewable Natural Gas
   (“RNG”) plant exempt from Florida sales and use tax.
2. Whether Taxpayer, contractor or subcontractor, may issue tax exemption certificates
   certifying that such items being purchased are eligible for the RNG equipment exemption
   in order to purchase such items exempt from Florida sales and use tax.
3. Whether Taxpayer, contractor and subcontractors may rely on the advice given by the
   Department pursuant to the Technical Assistance Advisement.
   ANSWERS:
4. Taxpayer, contractor, and subcontractors will be able to purchase the machinery and
   equipment and integral building materials, items 1, 3-15, and 17-18, listed and described
   above, to construct the RNG plant exempt from Florida sales and use tax under s.
   212.08(5)(v), F.S.
5. Taxpayer, contractor, or subcontractor may issue a tax exemption affidavit certifying that
   such items being purchased are eligible for the RNG equipment exemption under s.
   212.08(5)(v), F.S., in order to purchase such items, exempt from Florida sales and use tax.
6. This response constitutes a TAA under s. 213.22, F.S., which is binding on the Department
   only under the facts and circumstances described in the request for this advice, as
   specified in s. 213.22, F.S. Our response is predicated on those facts and the specific
   situation summarized above. You are advised that subsequent statutory or administrative
   rule changes, or judicial interpretations of the statutes or rules, upon which this advice is
   based, may subject similar future transactions to a different treatment than expressed in
   this response.
   February 5, 2025

Re:

Technical Assistance Advisement – TAA #: 25A-002
(“Taxpayer”)
Sales and Use Tax – Renewable Natural Gas (“RNG”)
Sections 212.02, 212.05, 212.055, 212.08(5)(v), Florida Statutes - (“F.S.”)
Rule 12A-1.096, Florida Administrative Code - (“F.A.C.”)
BP #:

Technical Assistance Advisement
February 5, 2025
Page 2

Dear
This is in response to your letter received in this office on
, requesting this
Department’s issuance of a Technical Assistance Advisement (“TAA”) pursuant to Section(s.)
213.22, F.S., and Rule Chapter 12-11 F.A.C, Florida Administrative Code, regarding the matter
discussed below. Your request has been carefully examined, and the Department finds it to be in
compliance with the requisite criteria set forth in Chapter 12-11, F.A.C. This response to your
request constitutes a TAA and is issued to you under the authority of s. 213.22, F.S.
REQUESTED ADVISEMENTS

1. Whether Taxpayer, contractor, and subcontractors, will be able to purchase the
   equipment and integral building materials to construct the RNG plant exempt from
   Florida sales and use tax.
2. Whether Taxpayer, contractor, or subcontractor, may issue tax exemption certificates
   certifying that such items being purchased are eligible for the RNG equipment exemption
   in order to purchase such items exempt from Florida sales and use tax.
3. Whether Taxpayer, contractor and subcontractors may rely on the advice given by the
   Department pursuant to the Technical Assistance Advisement.
   FACTS
   You state in your letter:
   Taxpayer is a gas producer that will be engaged in the business of manufacturing RNG from
   landfill gas for sale at wholesale by developing a plant in
   (the “RNG
   Plant”). Taxpayer will sell its productive output of RNG to
   (“Gas Utility Company”)
   for resale to the public.
   Taxpayer has entered into an engineering, procurement and construction contract with
   (“Contractor”) to design and construct the RNG
   Plant1. The equipment to operate the RNG Plant (“Equipment”) will in large part be purchased
   by Contractor, and subcontractors engaged by Contractor (“Subcontractors”). In addition,
   Contractor and Subcontractors will purchase certain building materials to make improvements
   to real property which will shelter and protect the equipment from the elements, or which are
   integral parts of the manufacturing process (“Integral Building Materials”).
   The RNG Plant will upgrade gas that has been captured and collected form the landfill into RNG
   that will be injected into the Gas Utility’s pipeline. This technology captures carbon that would
   be emitted by the landfill gas escaping into the atmosphere and repurposes the methane for
   1

A copy of the contract between Taxpayer and Contractor was provided for review.

Technical Assistance Advisement
February 5, 2025
Page 3

beneficial use which would otherwise be destroyed by the landfill’s flare.
The RNG Plant will have a nameplate inlet capacity of 2,000 standard cubic feet per minute (scfm)
of raw landfill gas that can generate up to 1,002 scfm of RNG meeting pipeline specifications. The
forecasted gross annual production is 277,472 million British thermal units (MMBtu) starting in
2025 and increasing to a peak of 473,477 MMBtu in 2040. The RNG will be injected into the Gas
Utility’s distribution system for transport to the Gas Utility’s customers.
The necessary major Equipment and components (including improvements to real property that
will shelter and protect the Equipment from the elements or are an integral part of the RNG
manufacturing process) to construct the RNG Plant are listed below.

1. Machinery and Equipment Foundations and Platforms: Machinery and equipment
   foundations and platforms include support structure and foundations for the machinery
   and equipment in the RNG plant. These include, but are not limited to, steel and concrete
   pilings, platforms and the superstructure required to hold and support the primary
   equipment, ductworks and systems that comprise the RNG Plant’s systems. These
   components will be improvements to real property which are integral to the RNG
   manufacturing, storage and transportation process, and will be constructed with Integral
   Building Materials.
2. Equipment Canopy required to protect the machinery and equipment from weather,
   heat, and sun exposure as required to operations and equipment reliability. The
   equipment canopy structure will provide support for electrical and mechanical runs
   integral to the process. The Equipment Canopy will be an improvement to real property
   that is integral to the RNG manufacturing, storage and transportation process, and will be
   constructed with Integral Building Materials.
3. 150,000-pound (lb) Carbon Vessel media-based Hydrogen Sulfide Removal System.
4. Landfill Gas Booster Blower required to transfer the landfill gas (“LFG”) from the landfill
   to the TNG plant.
5. Feed Compressor and moisture removal system comprised of chiller and dryer, to
   compress, dewater, and precondition the gas for treatment.
6. Pressure Swing Adsorption (PSA) Skid to remove volatile organic compounds and
   siloxanes from the gas.
7. Membrane Skid to remove carbon dioxide and oxygen from the gas.
8. Vacuum compressors to regenerate the adsorbent beds in the PSA skid and send the lowpressure tail gas to the flare for destruction.
9. Nitrogen Rejection Unit (NRU), including vacuum and recycle compressors, to remove
   excess nitrogen and oxygen that was not removed by the Membrane Skid from the gas.
10. Gas Dryer to remove excess moisture from the gas following treatment.
11. Product Gas Compressor to compress gas to the pressure required by the interconnection
    point to allow entry into the pipeline distribution system.
12. Thermal Oxidizer to destroy tail gas produced by the PSA, Membrane Skid, and NRU.

Technical Assistance Advisement
February 5, 2025
Page 4

13. Emergency Flare to safely destroy gas in event of plant shutdown.
14. Compressed Air System to provide activation of plant’s instrumentation and controls
    essential for safe and controlled operation.
15. Condensate storage and removal systems, including oil-gas separators, knockout tanks,
    sumps, pumps, and associated piping to remove water produced during the upgrading
    process for treatment and disposal.
16. Electrical Building and Control Room: The electrical building and control room contain
    necessary generator switchgear, electrical equipment and the controls for all of the
    machinery and equipment in the RNG plant. All references in this Request to “Electrical
    Building and Control Room” shall include the equipment contained therein. The TNG
    cannot function without the electrical building, control room, and related equipment, and
    therefore will be improvements to real property which will be integral to the RNG
    manufacturing, storage and transportation integral to the RNG manufacturing process,
    and will be constructed with Integral Building Materials.
17. Natural Gas Lines: The natural gas lines deliver TNG produced from the Plant to the
    . In addition, a separate
    natural gas delivery point
    to the thermal oxidizer’s supplemental burner to maintain destruction temperature of
    the tail gas. The TNG plant cannot function without both lines. These lines will be
    improvements to real property which will be integral to the RNG manufacturing, storage
    and transportation process, and will be constructed with Integral Building Materials.
18. Electrical Transformers with associated structure and foundations: The transformers
    step-down the voltage from the
    utility, 23,000V to 4160V
    and 480V.
19. Miscellaneous Equipment and Machinery:
    - Electrical equipment including equipment wiring and conduit, controls, drives, panels,
    switches, transmitters, instrumentation, and metering;
    - Equipment pump, motors and drives;
    - Equipment tanks, piping, and pressure reduction valves and other control valves; and
    - Ancillary electrical and mechanical components associated with major equipment
    that support the RNG systems.
    LAW AND DISCUSSION
    Unless a specific exemption applies, s. 212.05, F.S., provides it is the legislative intent that every
    person is exercising a taxable privilege that engages in the business of selling tangible personal
    property2 in this state. For exercising such a privilege, a tax is levied on each taxable transaction
    or incident. The tax is due and payable at the rate of 6 percent, plus any applicable surtaxes
    imposed under s. 212.055, F.S., on the total consideration received for each item or article of
    tangible personal property when sold at retail in this state.

2

Tangible personal property means and includes personal property which may be seen, weighed, measured, or touched
or is in any manner perceptible to the senses. See s. 212.02(19), F.S.

Technical Assistance Advisement
February 5, 2025
Page 5

Section 212.08(5)(v), F.S., provides that the purchase of machinery and equipment that is
primarily used in the production, storage, transportation, compression, or blending of renewable
natural gas3 and that is used at a fixed location is exempt from the tax imposed by this chapter.
Purchasers of machinery and equipment qualifying for the exemption provided in this paragraph
must furnish the vendor with an affidavit stating that the item or items to be exempted are for
the use designated herein. See s.212.08(5)(v)3., F.S.4
The exemption from Florida sales and use tax provided under s. 212.08(5)(v), F.S., applies to
machinery and equipment that is primarily used in the production, storage, transportation,
compression, or blending of renewable natural gas and that is used at a fixed location. As it
pertains to this exemption, a definition for machinery and equipment is not provided in
paragraph (v) of subsection (5) of s. 212.08, F.S. In general, “machinery and equipment" refers
to a collective term encompassing large, complex machines used in a production process
(machinery) alongside smaller tools and devices that facilitate the operation of those machines
or perform specific tasks within a business (equipment). Typically, machinery and equipment are
tangible personal property and are not real property.
Contractors performing real property improvements are subject to the provisions of Rule 12A1.051, F.A.C. Generally, contractors will be subject to tax on all materials consumed in the real
property improvement activities.
Only purchases of machinery and equipment that Taxpayer uses primarily in the production,
storage, transportation, compression, or blending of renewable natural gas would be exempt
from Florida sales and use tax under s. 212.08(5)(v), F.S. Based on a review of the machinery and
equipment and the building materials used to perform real property improvements to the facility
that are listed and described above, to construct the RNG plant, it is determined that only
machinery and equipment and specific foundations and platforms to support such machinery and
equipment that are integral and provide a significant function within the production process of
RNG would be eligible and qualify for the exemption provided under s. 212.08(5)(v), F.S. Items
1, 3-15, and 17-18, would be eligible and qualify for the exemption. Materials used to construct
item 2, Equipment Canopy and item 16 Electrical Building and Control Room would not be eligible
and qualify for the exemption provided.
To obtain the exemption from tax, Taxpayer would provide the suggested affidavit provided in
Tax Information Publication No: 23A01-11, Sales and Use Tax Exemption for Renewable Natural
Gas Machinery and Equipment.

The term “renewable natural gas” means anaerobically generated biogas, landfill gas, or wastewater treatment gas
refined to a methane content of 90 percent or greater, which may be used as transportation fuel or for electric
generation or is of a quality capable of being injected into a natural gas pipeline. For purposes of this paragraph, any
reference to natural gas includes renewable natural gas. See s.212.08(5)(v)1., F.S.
4
See: Tax Information Publication No. 23A01-11, dated June 12, 2023, for a suggested affidavit.
3

Technical Assistance Advisement
February 5, 2025
Page 6

It should be noted that any dealer that takes an exemption document or an exemption permit in
good faith would be relieved of the liability to collect tax and the Department would look solely
to the purchaser for any tax that may be subsequently determined to be due. A selling dealer
accepting the permit in good faith, will not be held liable for any potential tax due; liability will
rest with the purchaser/holder of the permit.
As to your contention regarding a previously issued TAA, it is important to note that a TAA has
no precedential value except to the taxpayer who requests the advisement. See s. 213.22, F.S.
CONCLUSIONS

1. Taxpayer, contractor, and subcontractors will be able to purchase the machinery and
   equipment and integral building materials, items 1, 3-15, and 17-18, listed and described
   above, to construct the RNG plant exempt from Florida sales and use tax under s.
   212.08(5)(v), F.S.
2. Taxpayer, contractor, or subcontractor may issue a tax exemption affidavit certifying that
   such items being purchased are eligible for the RNG equipment exemption under s.
   212.08(5)(v), F.S., in order to purchase such items, exempt from Florida sales and use tax.
3. This response constitutes a TAA under s. 213.22, F.S., which is binding on the Department
   only under the facts and circumstances described in the request for this advice, as
   specified in s. 213.22, F.S. Our response is predicated on those facts and the specific
   situation summarized above. You are advised that subsequent statutory or administrative
   rule changes, or judicial interpretations of the statutes or rules, upon which this advice is
   based, may subject similar future transactions to a different treatment than expressed in
   this response.
   You are further advised that this response, your request and related backup documents are
   public records under Chapter 119, F.S., and are subject to disclosure to the public under the
   conditions of s. 213.22, F.S. Confidential information must be deleted before public disclosure. In
   an effort to protect confidentiality, we request you provide the undersigned with an edited copy
   of your request for TAA, the backup material and this response, deleting names, addresses and
   any other details which might lead to identification of the Taxpayer. Your response should be
   received by the Department within ten (10) days of the date of this letter.
   If you have any further questions with regard to this matter and wish to discuss them, you may
   contact me directly at (850)717-6839.
   Sincerely,

Xiaoxi Miao
Xiaoxi Miao
Tax Law Specialist

Technical Assistance Advisement
February 5, 2025
Page 7

Office of Technical Assistance
(850)717-6839
CC:

Enclosure: Tax Information Publication No: 23A01-11
Record ID: 7001135588

Technical Assistance Advisement
February 5, 2025
Page 8

TADR Satisfaction Survey
The Florida Department of Revenue invites you to complete the online TADR Satisfaction Survey to help
us identify ways to improve our service to taxpayers. The survey is an opportunity to provide feedback
on your recent experience with the Department’s office of Technical Assistance and Dispute Resolution
(TADR). To access the survey, place the following address in your browser’s access bar:
https://tadr.questionpro.com
When you open the survey, you’ll be asked to enter the following information. This information will
enable you to complete and submit the survey.
Notification number:

7001135588

Respondent code:

44

Tax type:

Sales and Use Tax

Correspondence type: Technical Assistance
If you need technical assistance accessing the survey, please email Douglas Charity at
[email protected].
Thank you.