Ezel / Tax Rulings / NE
NE 01-76-13 Sales and Use Tax 1976-09-08

Was steam heat sold through a closed system subject to Nebraska sales and use tax?

Short answer: No. When a utility piped steam through a customer's heating system and the condensed water returned to the utility, the transaction transferred heat rather than tangible personal property, and steam heat was not an enumerated taxable utility service.

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This page answers the general question as of 1976. Ezel answers yours, under current Nebraska tax law, with citations.

Currency note: this ruling is from 1976
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a historical 1976 Nebraska Revenue Ruling on steam heat delivered through a closed system. Nebraska Revenue Rulings are general guidance described by the Department as advisory but binding on it until amended. The categories of taxable property, energy, and utility services may have changed, so confirm current law and the ruling's status.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

Steam heat delivered by a utility through a closed system was not subject to Nebraska sales and use tax. The utility piped steam through the customer's building and received it back as condensed water.

Why the transaction was not taxable

The Department found no sale of tangible personal property because the steam returned to the utility. Instead, the transaction transferred energy in the form of heat.

Under the Nebraska Revenue Act of 1967, as amended, only specifically identified energy or utility services were taxable. Heat delivered in the form of steam was not included in that list.

Common questions

Q: Did the customer buy the steam itself?

A: The ruling said no tangible personal property was sold because the steam was returned to the utility through the closed system.

Q: What was transferred to the customer?

A: Energy in the form of heat.

Q: Were all energy and utility services exempt?

A: No. The ruling said specifically enumerated services were taxable; steam heat was not among them at the time.

Q: Did the return system matter?

A: Yes. The described steam circulated through the customer's heating system and returned to the supplier as condensed water.

Citations and references

  • Nebraska Revenue Act of 1967, as amended — identified taxable energy and utility services
  • Nebraska Revenue Ruling 01-76-13 — steam heat in a closed return system

Source

Source-quality note: The source is a low-quality scan and the extracted text contains OCR errors. The facts, reasoning, and non-taxability holding are legible and are the basis for this summary.

Original ruling text

Revenue Ruling L-76-L3

Sales and, USe TAx - SICAM HCAI. THE SAI,E OF HEAT IN THE

SAÍ,ES AT\TD USE TÐ( WHERE THE
RETURNED
TO THE UTILITY COMPATiIY
VAPOR
IS
STEA¡,T OR CONDENSED
TTTROUGH A CLOSED SYSTEM.

Advice has been requested regarding the taxabÍlity of steam
heat sold, by a utility company to a business. Steam is
produced. by a ut,ílity company and piped throughout the
heating system of the building housing the taxpayerrs business. As the st,eam cools, it ís returned through pípes in
the form of water to the utility company.
There is no sale of tangible personal property to Èhe business
because the steam is returned to the utility company. The
transaction is one Ín which energy in the form of heat is
transferred..

Only those sales of energy or utility

services as are speci-

fically id.entified, in the Nebraska Revenue Act of L967 r ês
amended, are subjecÈ to sales and, use tax. HeaÈ in the form
of steam is not therein included.
The sale of heat in the form of steam which is pÍped to the
customer, circulated through the customerrs heating system,
and then piped back t,o the supplier is not subject to sales
and use tax as neither a sale of tangible personal properÈy
nor of an enumerated. utility service has t,aken place.
APPROVED:

Z

rS

State Tax Commissioner
September

L97 6

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