LR 8209
Materials and Supplies Used to Make Furniture Exempt from Tax under 144.054
September 30, 2022
Dear Applicant:
This is a letter ruling issued by the 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 August 2, 2022.
The facts as presented in your letter ruling request are summarized as follows:
Applicant is a maker of furniture. Items like sandpaper and router bits are consumed by the Applicant in the furniture making process.
ISSUE:
Do sandpaper and router bits used in the course of making furniture qualify for a manufacturing exemption?
RESPONSE:
Yes, sandpaper and router bits are materials and supplies, and therefore qualify for the manufacturing exemption under section 144.054.2.
Section 144.020.1.(1) RSMo, generally imposes a tax upon the purchase price paid for tangible personal property.
Section 144.030.2.(4) RSMo, contains a state and local sales tax exemption for replacement parts.
Section 144.054.2 RSMo, contains a state sales tax, and local use (but not a local sales) tax, exemption for parts, materials, and supplies consumed in the manufacturing of a product.
Section 12 CSR 10-111.010(2)(G). Defines "parts" to include:
"Articles of tangible personal property that are components of machinery or equipment, which can be separated from the machinery or equipment and replaced. Like machinery and equipment, parts must have a degree of permanence and durability."
Section 12 CSR 10-111.010(2)(G). Defines "materials and supplies" to include items that would otherwise constitute "parts" except they are consumed in a processing and production cycle.
In this instance, the Applicant has represented that the items are consumed in the furniture making process. Based upon the Applicant's representations, the items lack the degree of permanency and durability to qualify as "parts" under the replacement parts exemption to state and local sales and use taxes found in Section 144.030.2.(4) RSMo. Based upon the Applicant's representations, the items do qualify as "materials and supplies" exempt from state sales and use taxes, and local use taxes, under Section 144.054.2 RSMo. Please note, the Applicant is not exempted from paying local sales taxes on the items under Section 144.054.2 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 Legal Counsel Nathan Jefferson, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford