The Missouri Department of Revenue has recently ruled that equipment, parts, materials, and supplies used in a Taxpayer’s tool room to manufacture replacement parts for its manufacturing machinery are exempt from Missouri sales and use tax. The Taxpayer’s tool room is a separate area in its facility that is used to manufacture replacement parts for its manufacturing machinery and equipment. Under Missouri tax law, machinery, equipment, and materials used or consumed in the manufacturing process are exempt. Since the Taxpayer’s purchases of equipment, parts, and supplies for its tool room are used or consumed in the manufacturing of the replacement parts. such purchases are exempt from state sales taxes.
In addition, utilities used in the tool room to manufacture the parts are also exempt. However, utilities used to repair the Taxpayer’s tool room equipment are not exempt because it is not consumed in the manufacturing of the replacement parts. Therefore, the Taxpayer must calculate the percentage pf the utilities that are used for exempt activities.
The state also recently ruled that a crane leased by an out-of-state leasing company to a Missouri Taxpayer that is used in the Taxpayer’s manufacturing process to lift materials and place the materials directly on a conveyor at the beginning of the manufacturing process line is exempt from Missouri sales and use tax as manufacturing equipment. The crane is part of an integrated and synchronized system and is used directly in the manufacturing process.
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