Costco Denied N.Y. Tax Refund for Electricity Used for Pans

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By Che Odom

Costco Wholesale Corp. won’t receive a refund for taxes paid in New York on electricity it used to wash pots and pans used to make food products.

The New York Tax Appeals Tribunal ruled in a determination letter released March 17 that the Issaquah, Wash.-based retailer wasn’t entitled to an exemption for electricity used in the production of tangible goods, which would have allowed it a $125,013.31 refund of sales taxes it paid in 2012 ( In re Costco Wholesale Corp. , N.Y. Tax App. Trib., No. 825882, 3/6/17 ).

Costco said it used the electricity to operate pan washers in its bakeries to wash, rinse and sanitize equipment to comply with Food and Drug Administration regulations.

The tribunal, however, determined the pan washers weren’t “directly connected to production equipment and do not provide a vital function during the production process” in maintaining a controlled environment, as required by the pertinent statute. Instead, the washers were used “pre- and post-production.”

To contact the reporter on this story: Che Odom in Washington at

To contact the editor responsible for this story: Ryan C. Tuck at

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