Wednesday, December 28, 2005

Manufacturing Issues to Consider

One of the recommendations I make in my seminars is that sales tax folks need to subscribe to a newsletter. And the one that I recommend is Sales & Use Tax Alert from CCH. It is a very worthy publication. The 12/15 article contains a very useful article about the manufacturing exemption. To summarize it:

1. Many states offer manufacturing exemptions.
2. Are you a manufacturer? It's not necessarily a dusty, noisy shop that makes you one. If you change stuff from one form to another, you may qualify depending on the state.
3. What is the "scope" of manufacturing. Depending on the state, this can include areas that you have been treating, incorrectly, as taxable
4. Look at what's exempt including raw materials, consumables and equipment. State defer, but again, you may have been taxing stuff that was not taxable.
5. Look carefully at the actual words in the laws. Issues turn on very specific phrases.

Obviously there's more in the article. Subscriptions are expensive, but well worth to for an SUT professional, particularly with multi-state exposure.

Sales Tax Guy

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