September 25, 1984

You inquire whether the Massachusetts sales tax applies to the lease of a photovoltaic solar array and associated wiring to ("A"). The array is attached to the roof of A's principal residence in Massachusetts. When the sun's rays strike boundaries between dissimilar substances in the array, electricity is generated. Some of the electricity directly supplies the energy needs of A's house; the rest is sold to A's local utility, which credits A so many cents per unit of electricity supplied.

You state that the lessor of the array has been charging A a sales tax on the lease payments, which have been made monthly, beginning sometime after November, 1981.

The definition of "sale" in the Massachusetts sales tax statute expressly includes leases and rentals. G.L. c. 64H, § 1(12)(a).

General Laws Chapter 64H, Section 6(dd) provides an exemption for:

Sales of equipment directly relating to any solar, wind-powered, or heat pump system, which is being utilized as a primary or auxiliary power system for the purpose of heating or otherwise supplying the energy needs of an individual's principal residence in the commonwealth.

The photovoltaic array that A is leasing is being utilized to supply the energy needs of his principal residence in Massachusetts. Sale to the utility of the excess electricity generated by the array is the only practical means of making full use of its potential for electrical generation. In substance, the array is used exclusively to supplant electricity from conventional sources for a Massachusetts residence.

Based on the foregoing, it is ruled that the lease of the solar array and associated wiring to A is exempt from the sales tax.

The lessor of the array may apply for an abatement of the tax paid on the lease by filing Form CA-6 together with copies of this ruling, your letter of inquiry, and the lease. No actual refund will be made to the lessor until he establishes that he has repaid to A the amount for which application is made (G.L. c. 62C, § 37).

Very truly yours,
Commissioner of Revenue
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LR 84-88