No Investment Tax Credit for Company which Delivered Natural Gas, as Opposed to Processing or Manufacturing a Product

The Third Department upheld the NYS Tax Appeals Tribunal’s determination that the petitioner, Brooklyn Union Gas Company, was not entitled to an investment tax credit (ITC) because it was in the business of delivering natural gas, not producing or processing a product as those terms are construed for an ITC under the Tax Law:

The record amply supports, for purposes of our limited review, the Tribunal’s determination that petitioners’ integrated system  was  primarily one  of  distribution and  delivery  rather than processing or manufacturing.  The  vast  majority  of petitioners’ 11,000-mile system, both  in terms  of size and  cost, is comprised of pipes and  mains  through  which  natural gas  flows.  No material change occurs to the natural gas while in the pipes and mains, as these serve as the primary means for delivering the product. Viewing the system as a whole, the modifications made by petitioners to the gas  –  while important –  do  not  result in a significant change  in the product.  Matter of Brooklyn Union Gas Company v NYS Tax Appeals Tribunal, 514825, 3rd Dept, 6-6-13