SF4169

Purpose

This bill would create a system to tax electricity sold as vehicle fuel at public EV charging stations, establish licensing for public charging station operators, require recordkeeping and reporting, and define exemptions. It also makes related changes to how charging stations are defined and how revenue may be used. It includes a provision exempting electricity sold at charging stations from certain existing taxes.

Key definitions introduced or clarified

• Public Retail charging station: a for-profit facility that provides electricity as vehicle fuel to electric vehicles and charges customers for the electricity.
• Public Retail charging station operator: any person who owns or operates a public retail charging station in Minnesota.
• Electricity sold as vehicle fuel: electricity delivered and charged as the fuel for electric vehicles.
• Legacy charger: an older charging station in operation before a certain date that does not measure electricity delivered as vehicle fuel.
• Electric vehicle: as defined by existing law (reference to a Minnesota statute on vehicle definitions).
• Per kilowatt hour (kWh): the unit used to price electricity sold as vehicle fuel.
• Commissioner: the state official who oversees licensing and tax administration for charging stations.

Main provisions and what the bill seeks to accomplish

• Section defining and clarifying terms

  • Establishes and clarifies what counts as a Public Retail charging station and a Public Retail charging station operator.

• License for charging station operators

  • Beginning July 1, 2027, operators must be licensed by the commissioner to run a public charging station.
  • Eligibility depends on criteria such as not having overdue taxes, unfiled returns, recent license revocation, or an equivalent license revoked in another state within the last five years.
  • Licenses last one year (ending June 30) and can be surrendered if the business ends or changes hands.
  • Noncompliance (operating without a license) triggers penalties.

• Tax on electricity sold as vehicle fuel

  • Starting July 1, 2027, a tax of 5 cents per kWh is imposed on electricity sold as vehicle fuel at public charging stations.
  • Each August 1, the tax rate for the next year is adjusted based on changes in the Minnesota Highway Construction Cost Index, using the rate from the current year as the base.
  • The adjusted rate must be rounded to the nearest tenth of a cent and cannot be lower than the base rate; the annual increase cannot exceed 3 percent.
  • The rate calculation uses a reference year defined as the 12 months ending June 30 two years prior to the year of calculation.
  • Taxpayers must file monthly reports (and remittances) by the 23rd of each month, detailing electricity sold and other required information.

• Charging station equipment requirements

  • New charging stations delivering electricity as vehicle fuel on or after July 1, 2027 must be capable of charging on a per-kWh basis (i.e., price electricity by the kWh).

• Exemptions

  • Legacy chargers are exempt from the tax through December 31, 2031; after that date, legacy chargers must be able to charge by the per-kWh method.
  • The tax does not apply to electricity charged at certain residences (private home charging) or to charging stations with very limited capacity, or to charging where electricity is provided without direct payment (and certain government-related charging).
  • Electricity sold as vehicle fuel for U.S. government use or by contractors on national defense projects is exempt.

• Recordkeeping and examinations

  • Public charging station operators must keep accurate records of all electricity sold and must retain them for three years.
  • Records must be accessible to the commissioner or an authorized representative.
  • The commissioner may periodically examine the records of distributors, public charging stations, and related entities.

• Penalties for noncompliance

  • If a person operates as a charging station operator or other covered entity without the required license, they owe the tax and fees plus a 25% penalty, with interest.

• Related tax exemption for electricity sold at charging stations

  • The bill adds a Subdivision to the sales tax statute stating that electricity sold at a retail charging station as vehicle fuel for an electric vehicle is exempt from certain taxes. It also specifies how “electric vehicle” and “electricity as vehicle fuel” are defined for these purposes and confirms the definition of “retail charging station.”

• Administration and related charges

  • The bill makes the above changes in coordination with existing tax and transportation-related statutes, including how rates are updated and how charges are calculated and collected.

Significant changes to existing law

• Creates a new licensing regime for public retail charging station operators, with annual licenses and eligibility requirements tied to tax and licensing history.
• Establishes a new tax on electricity sold as vehicle fuel at charging stations, with a base rate and annual adjustments tied to a construction-cost index, plus monthly/quarterly reporting requirements.
• Requires charging stations delivering electricity for vehicle fuel after a certain date to support per-kWh pricing.
• Expands recordkeeping requirements to include charging station operators, and empowers the state to audit these records.
• Introduces penalties for operating without a required license.
• Adds an exemption for electricity sold at charging stations from certain state taxes, and clarifies exemptions related to legacy chargers and certain low-usage or government-use cases.

Effective dates and transition timing

• July 1, 2027: Tax on electricity sold as vehicle fuel at public charging stations begins (base rate of 5 cents per kWh).
• July 1, 2027: Licensing requirement for public retail charging station operators takes effect.
• August 1 each year: Tax rate update based on the Highway Construction Cost Index.
• Through December 31, 2031: Legacy chargers remain exempt from the new tax; after that date, legacy chargers must implement per-kWh pricing.
• Ongoing: Records retention and examinations apply to operators and other entities under the bill.

Potential impacts

• Public charging station operators would need to obtain and maintain licenses, maintain records, and file regular tax reports.
• The price of electricity delivered as vehicle fuel at charging stations could rise due to the new tax and rate adjustments, affecting costs for EV drivers.
• Certain small or residential charging scenarios may be exempt from the tax, potentially preserving lower operating costs for home charging and some government or no-payment charging setups.
• The cost index-based rate adjustments introduce annual predictability (to a degree) but also variability based on construction cost trends.
• The exemptions and license requirements could affect the competitive landscape among charging network operators and their business models.

Relevant terms - Public Retail charging station - Public Retail charging station operator - Electricity sold as vehicle fuel - Per kilowatt hour (kWh) - Legacy charger - Electric vehicle - Commissioner - License (public retail charging station operator license) - Highway Construction Cost Index - Reference year - Tax rate adjustment - Monthly/quarterly reporting - Remittance - Exemptions (private residence charging, government use, no-payment charging) - Recordkeeping and examinations - Penalty for operating without a license - Exemption from sales tax for electricity sold at charging stations