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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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347.0000 Manufacturing Equipment—Regulation 1525.2
Annotation 347.0535
347.0535 Manufacturer's Partial Exemption—Transportation Equipment. A manufacturer operates four separate yet integrated plants located within several miles of each other. Each plant performs a different segment of the manufacturing process. No single plant manufactures a finished commercially marketable product. After each stage of manufacturing, the unfinished product is shipped to the next plant for further processing using large trucks or some other type of mobile transportation equipment and loading and unloading equipment such as forklifts, containers, etc. The manufacturer believes that the property used to transport the unfinished materials between the various plants should be eligible for the partial exemption from sales and use tax because it should be treated the same way as equipment that moves materials along one continuous production line at a single geographic manufacturing location.
Regulation 1525.2 (c) (10) (A) specifically identifies belts, shafts, moving parts, operating structures, conveyance systems and assembly lines within the definition of property subject to the partial exemption. It does not include items such as trucks, mobile transportation equipment or other property used to store or transport unfinished goods between two distinct geographic locations. The transportation of raw materials to or between each facility does not constitute a manufacturing activity for purposes of section 1525.2 and does not qualify for the partial exemption. 09/18/00. (2001–3).