Tax Law and Business Organization Strategy

Wind Energy Part 6 -- Tax Abatement Issues

As mentioned in Part 5, the Texas Attorney General has issued an opinion treating the wind turbines, etc., as personal property belonging to the wind developer/lessee. The implications of this ruling are fairly wide-reaching. For that reason, if the AG is not persuaded to change his opinion, I think the legislature will probably act to allow abatements on wind turbines, etc.

The AG’s opinion was requested in the context of granting a tax abatement to a wind developer. Apparently, one of the owners of the land to be developed also sat on the body with the power to grant the abatement. The law restricts the makeup of that body to those who are not being granted an abatement. Rather than simply resigning from the body, the land owner forced a requrest for an AG’s opinion to the effect that the wind turbines, etc., were the only property on which the abatement was to be granted. Those properties belonged to someone other than the member of the commission. Therefore, the law was not violated, as the member of the body was not receiving an abatement.

The AG in effect agreed with the outcome regarding the member of the body, but its reasoning prevented the abatement from being granted in the first place. The abatement statute only allows an abatement for real property. The AG found that the wind turbines, etc., since they were owned by someone other than the land owner, were fixtures that should be treated as personally property belonging to the developer and not the surface owner.

Most all wind farms are subject to an ad valorem tax abatement of some sort. This ruling brings all of those abatements into question.

Trackbacks (0) Links to blogs that reference this article Trackback URL
Comments (0) Read through and enter the discussion with the form at the end
Sprouse Shrader Smith PC
701 S. Taylor, Suite 500, Amarillo TX 79101

Phone: 806.468.3300