Nebraska § 77-2704.13 - Fuel, energy, or water sources; exemption.

§ 77-2704.13. Fuel, energy, or water sources; exemption.

Sales and use taxes shall not be imposed on the gross receipts from the sale, lease, or rental of and the storage, use, or other consumption in this state of:

(1) Sales and purchases of electricity, coal, gas, fuel oil, diesel fuel, tractor fuel, propane, gasoline, coke, nuclear fuel, butane, wood as fuel, and corn as fuel when more than fifty percent of the amount purchased is for use directly in irrigation or farming;

(2) Sales and purchases of such energy sources or fuels when more than fifty percent of the amount purchased is for use directly in processing, manufacturing, or refining, in the generation of electricity, in the compression of natural gas for retail sale as a vehicle fuel, or by any hospital. For purposes of this subdivision, processing includes the drying and aerating of grain in commercial agricultural facilities; and

(3) Sales and purchases of water used for irrigation of agricultural lands and manufacturing purposes.

In light of Nebraska Sales and Use Tax Regulation 1-089.02A(1), 316 Neb. Admin. Code, ch. 1, section 089.02A(1) (1994), the use of electricity to store treated water awaiting distribution does not qualify for an exemption from Nebraska sales tax under this section. Metropolitan Utilities Dist. v. Balka, 252 Neb. 172, 560 N.W.2d 795 (1997).

The definitions of "manufacturing" and "processing" contained in Nebraska Sales and Use Tax Regulation 1-089.02A(1), 316 Neb. Admin. Code, ch. 1, section 089.02A(1) (1994), are in conformance with this section. Metropolitan Utilities Dist. v. Balka, 252 Neb. 172, 560 N.W.2d 795 (1997).

Oxygen used in a metal cutting process through an "oxyfuel" cutting torch is a gas that is exempt under section 77-2704(1)(k) (Supp. 1983) and its predecessors. Vulcraft v. Karnes, 229 Neb. 676, 428 N.W.2d 505 (1988).