August 28, 2009
This is a letter ruling issued by the Acting Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated June 17, 2009.
The facts as you presented in your letter ruling request and a phone conversation with Senior Counsel Ron Clements are summarized as follows:
Applicant leases forklifts for use in its manufacturing plant. The forklifts currently in use have been leased to replace other forklifts that were previously used in Applicant’s manufacturing process. The forklifts are not purchased to establish a new manufacturing plant or expand an existing manufacturing plant. Applicant uses the forklifts to move raw material around, from, and to staging areas for immediate use during the manufacturing process. The forklifts at issue are not used in storing or moving the product after the manufacturing process is completed. Applicant pays sales tax on its leases of the forklifts.
Are Applicant’s leases of forklifts for use in its manufacturing plant exempt from Missouri sales tax under Section 144.030.2(4), RSMo?
Yes. Applicant’s leases of forklifts for use in its manufacturing plant are exempt from Missouri sales tax under Section 144.030.2(4), RSMo.
Section 144.030.2(4), RSMo, exempts from sales and use tax:
Replacement machinery, equipment, and parts and the materials and supplies solely required for the installation or construction of such replacement machinery, equipment, and parts, used directly in manufacturing, mining, fabricating or producing a product which is intended to be sold ultimately for final use or consumption.
Applicant leases the forklifts for direct use in its manufacturing process. When a forklift becomes outdated or unable to perform its functions in the manufacturing process, Applicant replaces the forklift by leasing another forklift. The lease of the replacement forklift is exempt from Missouri state and local sales and use taxes under Section 144.030.2(4), RSMo.
This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.
Should additional information be needed, please contact Senior Counsel Ron Clements, General Counsel’s Office, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-4413), or me.
Alana M. Barragán-Scott