Does Louisiana state sales tax apply to electricity sold at an electric-vehicle charging station and to a separately stated idle-time fee?

Plain-English summary

Louisiana Revenue Ruling 22-004 treated electricity sold to an electric-vehicle driver at a charging station as a taxable retail sale of tangible personal property.

The ruling rejected both electricity exemptions it discussed. Charging-station power was not furnished to a single private residence, and it was not being purchased as a business utility. The Department therefore applied the full state sales-tax rate in effect when the ruling was issued—4.45%—rather than the 2% business-utility rate described in the 2022 guidance.

How the station measured the charge did not matter. Tax applied whether the customer paid by time, such as per minute, or by the electricity used, such as kilowatt-hour.

A separately stated idle-time fee was different. Because a driver could avoid it by unplugging after charging and the fee did not help produce or deliver the electricity, the Department excluded it from the state sales-tax base.

Why charging electricity was taxable

Louisiana law and LAC 61:I.4301 classified electricity as tangible personal property. A charging station sold that property to the final consumer for personal vehicle use, making the transaction a retail sale.

The Department compared the purchase to other final-consumer sales. The charging-station operator made electricity available to the driver, measured the amount by time or energy, and charged for the power delivered.

The measurement unit changed the price calculation, not the legal character of the sale.

Why the utility exclusions did not apply

Single private residence

The Louisiana Constitution excluded electricity furnished to a single private residence from state sales and use tax. Electricity delivered at a vehicle charging station was not furnished to a residence, so that exclusion did not apply.

Business utilities

La. R.S. 47:305(D)(1)(d) addressed electric power for resale and certain industrial uses. The ruling also described a scheduled business-utility exemption that produced a 2% state rate from July 1, 2018 through June 30, 2025.

The driver was buying power as a final consumer for a vehicle, not as a business utility. The Department therefore applied the full state rate stated in the ruling.

Idle-time fees

An idle-time fee begins after the vehicle is fully charged but remains connected, often after a grace period. Its purpose is to encourage the driver to move the car so another customer can use the station.

The Department ruled that a separately stated idle fee was not part of sales price because:

• it had no connection to producing the electricity;
• it was not a cost required to bring the electricity to market; and
• the customer could avoid it by disconnecting promptly.

The ruling instructed station owners to state the fee separately and leave it out of the state sales-tax calculation.

Station owner's electricity purchase

The charging-station owner could purchase electricity without tax as a sale for resale, because the owner then resold the electricity to drivers.

The resale treatment applies to the operator's input purchase; the operator still collects tax on the retail sale to the driver under the ruling.

What this means for you

Charging-station operators

Collect state sales tax on the electricity charge, regardless of whether pricing is per minute or per kilowatt-hour. Keep a qualifying idle fee separately stated if you intend to exclude it from the state tax base.

Drivers and fleet managers

Expect sales tax on the charging transaction. A distinct post-charge idle fee was not state-taxable under this ruling, but the electricity itself was.

Accountants and tax teams

Separate the operator's resale purchase from the retail sale to the driver, and verify current rates because the ruling describes statutory rate and exemption periods that extended only through dates stated in the 2022 document.

Common questions

Q: Is electricity tangible personal property in Louisiana?

A: Yes. The ruling relied on LAC 61:I.4301 and the statutory definition to classify electricity as tangible personal property.

Q: Does pricing by the minute avoid tax?

A: No. Time-based and kilowatt-hour pricing were both taxable ways of measuring the same retail electricity sale.

Q: Is charging-station power exempt as residential electricity?

A: No. It is delivered at a charging station, not furnished to a single private residence.

Q: Is a separately stated idle fee taxable?

A: No under this ruling. It was avoidable and unrelated to producing or making the electricity available for sale.

Q: Can the station operator buy electricity for resale?

A: Yes. The ruling allowed the operator's purchase to be treated as a sale for resale before the taxable retail sale to the driver.

Citations and references

• La. R.S. 47:301(10)(a)(i) — retail sale
• La. R.S. 47:301(13)(a) — sales price
• La. R.S. 47:301(16)(a) — tangible personal property
• La. R.S. 47:302, 321, 321.1, and 331.1 — state sales and use tax
• La. R.S. 47:305(D)(1)(d) — electric-power exemptions discussed
• La. Const. art. VII, § 2.2(B)(2) — single-private-residence utility exclusion discussed
• LAC 61:I.4301 — electricity as tangible personal property
• LAC 61:III.101(C) — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 22-004

Original ruling text

Revenue Ruling No. 22-004
December 6, 2022
Sales Tax
Sales of Electricity at Charging Stations for Electric Vehicles Purpose The purpose of this ruling is to provide for the state sales tax treatment of electricity sold to drivers of electric vehicles at charging stations in Louisiana. Law Louisiana state sales and use tax is imposed in LA R.S. 47:302, 321, 321.1 and 331.1. Sales and use tax is imposed on the sales at retail, the use, the consumption, the distribution, and the storage for use or consumption in this state. Sales and use tax applies to retail sales as well as the use, lease or rental of tangible personal property. LA R.S. 47:301(16)(a) defines “tangible personal property” as personal property which may be seen, weighed, measured, felt or touched, or is in any other manner perceptible to the senses. LA R.S. 47:301(10)(a)(i) defines a “retail sale” as a sale to a consumer or to any other person for any purpose other than for resale as tangible personal property. LAC 61.I.4301 identifies utilities such as electricity as one of many examples of tangible personal property.1 Article VII, Section 2.2(B)(2) of the 1974 Louisiana Constitution excludes the sale of utilities, such as electricity, from state sales and use tax when the electricity is furnished to single, private residences. Additionally, LA R.S. 47:305(D)(1)(d) exempts sales of electric power, energy, any materials or energy sources used to fuel the generation of electric power for resale or used by an industrial manufacturing plant for self-consumption or cogeneration. This statute, typically, exempts these sales of electricity from state taxation. LA R.S. 47:321(P)(110),321.1(I)(110) and 331(V)(110) include the exemption of business utilities found in LA R.S. 47:305(D)(1)(d) on the exclusive list of exemptions and exclusions that are in operation from July 1, 2018, until June 30, 2025. This exemption is not included in the exclusive list found in LA R.S. 47:302(PP), resulting in the business purchase or use of electricity being subject to sales and use tax at the rate of 2%. Sales price is defined in LA R.S. 47:301(13)(a) as the total amount, including cash, credit, property, or services, that is received or paid for the sale of tangible personal property. Any part of the sales price that is related to costs incurred by the vendor to bring the product to 1

LAC 61:I:4301Tangible Personal Property(a)(iii)

A Revenue Ruling is issued under the authority of LAC 61III.101 (C). A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It is a written statement issued to apply principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on the public. It is a statement of the department's position and is binding on the department until superseded or modified by a subsequent change in statute, regulation, declaratory ruling, or court decision.

Revenue Ruling 22-004
December 6, 2022
Page 2 of 3

market or make the product available to customers becomes part of the tax base and is subject to sales tax even if a separate charge is made on the invoice. Facts and Analysis Electric vehicles are powered by an electric motor instead of the traditional internal combustion engine, commonly powered by gasoline. The electric motor is powered by a large traction battery pack that must be charged by being plugged into a wall outlet or charging equipment. The increased use of electric vehicles has created a demand for more charging stations, where drivers of electric vehicles have the ability to recharge their cars in the same manner that owners of traditional cars fill up at the gas station. When electric vehicle drivers charge their vehicles, the amount of electricity used is measured by the length of time of the charge (typically per minute), or by the amount of electricity used which is measured in units of kilowatts per hour (kWh). Retailers normally charge a specific cost per minute or kilowatthour. Tax Treatment of Sales of Electricity at Charging Stations Louisiana statutes and regulations consider electricity tangible personal property capable of being sold at retail and subject to sales and use tax. Consumers purchasing electricity at charging stations are responsible for paying sales tax on these purchases. The sale of electricity is not subject to sales tax when the electricity is being furnished to a single, private residence. Business purchases of electricity are taxed at a lower rate of 2% instead of the full state sales tax rate of 4.45%. Electricity purchased at a charging station is not being purchased for residential use, nor is it being purchased as a business utility. For these reasons, the constitutional exclusion and statutory exemption regarding sales of electricity do not apply. Electricity at charging stations is being sold to a final consumer for personal use, similar to any other retail sale of tangible personal property. The method of measurement, either in units of time or in units of electricity does not change the taxability of the transaction. Idle Time Fees In some instances, an owner of a car charging station may charge an additional fee for “idle time.” Idle time is when an electric vehicle has been fully charged but is still plugged in to the charging station. Station owners may charge a fee such as forty cents per minute after a ten-minute grace period in order to encourage vehicle owners to remove vehicles once their charging is complete and free the space for another customer. Charges for idle time have no connection to the sale of the electricity and are not subject to sales tax. Sales price consists of the total amount paid for the sale of tangible personal property and includes the cost of everything required to bring the product to market. The charge for idle time does not help produce the electricity and is completely avoidable if the A Revenue Ruling is issued under the authority of LAC 61III.101 (C). A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It is a written statement issued to apply principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on the public. It is a statement of the department's position and is binding on the department until superseded or modified by a subsequent change in statute, regulation, declaratory ruling, or court decision.

Revenue Ruling 22-004
December 6, 2022
Page 3 of 3

customer disconnects their vehicle from the charging station promptly after charging. Additional fees for things such as “idle time” should be separately stated and not included in the calculation of sales tax. Ruling Sales of electricity to consumers charging their cars at charging stations are subject to state sales tax. The electricity is tangible personal property being sold at retail. The owner of the charging station may purchase electricity without paying tax as a sale for resale. Additional fees for idle time are not subject to state sales tax, if separately stated. Questions concerning this publication may be submitted by email to Policy.Publications
@la.gov .

Kevin J. Richard, CPA
Secretary

A Revenue Ruling is issued under the authority of LAC 61III.101 (C). A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It is a written statement issued to apply principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on the public. It is a statement of the department's position and is binding on the department until superseded or modified by a subsequent change in statute, regulation, declaratory ruling, or court decision.