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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
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440.0000 Property Used in Manufacturing—Regulation 1525
Annotation 440.0988
(a) Manufacturing Aids
(7) Miscellaneous Specific Aids
440.0988 Chemicals Used in Conversion Coatings for Steel. Conversion coatings are coatings formed on metals by treatment with suitable combinations of acids and metallic salts in dilute solutions. The coating is the result of converting the exterior metallic molecules into another chemical compound with different physical and chemical properties. Tax applies as follows to chemicals used in the process.
Leeder 374-H—Leeder 374-H is a cleaner and iron phosphating compound and is used at about 1½ ounce per gallon of water at 140°–160° F. Under these conditions, the phosphate portion which is about 80% of the formula reacts with the outer layer of iron, forming a complex iron phosphate. This coating imparts a color, increases paint adhesion and increases corrosion resistance. Leeder 374-H may be purchased for resale since its primary purpose is to form a nonmetallic coating on the metal being treated through a chemical conversion of the surface metal, notwithstanding that it may to some extent perform a cleaning function prior to the actual disposition of the coating on the metal.
Leeder 272-H—Leeder 272-H is used with Leeder 374-H to control the pH in the proper range to get good disposition and improved corrosion resistance. Therefore, it is in the nature of a catalyst. It is used for purposes other than incorporation into the finished product. Under such circumstances, Leeder 272-H is regarded as a taxable manufacturing aid.
Leeder 771-H—Leeder 771-H is used in the final rinse stage to "stabilize and seal" the phosphate coating by depositing in the capillaries of the coatings itself. Since Leeder 771-H is being incorporated into the finished product, it may be purchased for resale. 5/10/71.