Solar Panel Leases: State Lacks Authority To Tax Them: AZ Court

PHOENIX, AZ – The state's Supreme Court says that the Arizona Department of Revenue does not have the authority impose property taxes on rooftop solar panels leased by homeowners. The decision leaves open the possibility that counties could impose a tax.

The court said it would be up to lower courts to make that decision.

The decision came in a case filed in 2013 when the revenue department – with the support of the state's largest electric company – decided that solar panels could be taxed as if they were electric generation facilities.

The state Supreme Court justices said the department of revenue is wrong.

"Because Taxpayers do not operate electric generation facilities, ADOR lacks authority under (state law) to value the solar panels," the court ruled.

If the court had ruled otherwise, companies such as SolarCity – which was the lead plaintiff – would have faced the possibility of paying millions of dollars in property taxes. Consumers would have likely seen their bills go up as a result.

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