The Tenth District Ohio Court of Appeals recently applied a statutory amendment clarifying the oil & gas exemption for Ohio sales & use tax retroactively. Interestingly, while this appeal was pending at the Board of Tax Appeals, the legislature amended the statute to clarify the scope of the exemption for fracking equipment. Although legislation is generally applied prospectively, this amendment was considered remedial and expressly stated that it clarified existing law and applied retroactively, including to current appeals. R.C. 5739.02(B)(42)(q). Stingray Pressure Pumping, LLC v. Tax Commr. of Ohio, 2019-Ohio-5198. This decision opens up refund opportunities for taxpayers in the oil & gas industry, even those currently appealing an assessment.
The particular issue in this case was whether a sales tax exemption applied to certain equipment used by Stingray Pressure Pumping, LLC in the production of crude oil and natural gas by fracking. The BTA initially denied exemption for equipment used to mix liquids and materials before being pumped into wells. Under previous case law, this type of property was taxable since it was considered adjunct to the drilling process, rather than used directly in the production of oil and gas.Read more by clicking here.