Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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495.0000 SALE

Annotation 495.0236


495.0236 Enrichment of Nuclear Fuel. The following covers the application of tax to the processing of nuclear fuel used in a nuclear generating station. In the analysis, it is presumed that the fuel cycle is already in a continuous process.

First Step:

The "reprocessing" charges are taxable as "fabrication" or "processing" labor to the extent that plutonium and unused uranium are recovered for later use. However, the charges are exempt to the extent that neptunium, plutonium, and other by-products are sold. This will require an allocation of the reprocessing charge between taxable and nontaxable components.

Second Step:

The "reconversion" charge made for converting the unused uranium into uranium hexafloride (UF6) is taxable as "fabrication" labor.

Third Step:

The labor involved in the enrichment step is regarded as "fabrication" labor. The measure of tax is the labor charge made by the processor only and does not include the "trade-in value" of the uranium hexafloride furnished by the utility company (nuclear station owner) to the processor, provided (1) the utility company retains title to the uranium hexafloride and (2) the processor receives the uranium hexafloride for enrichment prior to the time it ships equivalent amounts of enriched uranium hexafloride for the utility company's account. If the two conditions are met, it is considered to involve a commingling of fungible goods and the utility company receives from the processor the "same" property furnished even though it may in fact not be the same physical property. If either of the two conditions are not met, the transaction is viewed as an exchange or trade-in transaction, and the measure of tax is correspondingly increased.

If the enrichment is done by the Atomic Energy Commission, tax will not apply as it will qualify as a purchase from the United States Government.

Fourth Step:

Tax applies to the "manufacture" step.

Tax applies on steps subsequent to the enrichment step even though the enrichment may have been performed by the Atomic Energy Commission. 3/1/73.