Overview - Manufacturing Industry

Question 1

What are the 7 questions to ask yourself when trying to find applicable manufacturing exemptions?

Answer 1

1. What jurisdiction needs to be researched?
2. What exemptions exist?
3. What does the company manufacture at each facility?
4. How are the items are manufactured?
5. What specific exemptions apply to each location? (Differs by state)
6. How are these exemptions claimed and to which vendors?
7. What is the follow-up process to ensure that the sales tax is no longer being paid moving forward and refunds are being secured?

Question 2

What are 5 common questions you should ask yourself when trying to figure out if the exemption you’ve found in a state’s tax code actually applies to your manufacturing process?

Answer 2

1. Is there a mfg. exemption?
2. How does the state define mfg.?
3. How does the exemption apply?
4. Does the exemption apply to machinery/equipment, raw materials, material handling equipment, fuels/catalysts/chemicals, QC/testing, R&D, pollution control, safety equipment, repair/maint of equipment, or packaging?
5. Where does the mfg. process begin and end?

Question 3

An important thing to look at when looking for a manufacturing exemption is knowing how the state defines the …… and …… of the manufacturing process.

Answer 3

beginning, ending

Question 4

What are the 3 manufacturing exemption qualifiers and what is the order of each in terms of least restrictive to most restrictive?

Answer 4

1. Directly
2. Exclusively (100%)
3. Predominately (50%)

Question 5

What are the 10 most common categories of manufacturing exemptions?

Answer 5

1. Raw materials
2. Consumables/Catalysts
3. Machinery/Equipment
4. Packaging materials
5. Fuel/Utilities
6. R&D
7. Quality Control
8. Pollution Control
9. Repair/Installation
10. Enterprise Zones
11. Clean rooms
12. Safety equipment

Question 6

What are 3 things to note about raw materials regarding manufacturing exemptions?

Answer 6

• They’re usually considered sale for resale.
• They must remain in or be a component of the finished product.
• They may be required to provide a benefit to the finished product.

Question 7

What are 6 common types of manufacturing machinery and equipment?

Answer 7

• Process piping
• Generators/Boilers
• Forklifts/Cranes/Conveyors
• Production equipment
• Control computers
• Packaging equipment

Question 8

What are 5 common types of manufacturing packaging materials?

Answer 8

• Wrapping paper/Shrink Wrap
• Cartons/Boxes
• Tape
• Labels
• Bags

Question 9

Fuels/Utilities will usually be exempt if they are used to do what?

Answer 9

Supply power to production equipment

Question 10

When it comes to fuels/utilities, some states require an …… to determine the percentage of manufacturing usage.

Answer 10

energy study