LR 8363
Taxability of Anodizing Services
July 30, 2025
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 June 12, 2025.
The facts as presented in your letter ruling request are summarized as follows:
Applicant has received several previous letter rulings specifying what is and what is not subject to Missouri sales tax in its business operations. Applicant has applied for a renewal of the most recent letter ruling and the scope of their business activities has not changed since that ruling was issued.
Applicant is in the business of anodizing, electroplating, etching, and cleaning metal parts that are brought to Applicant by customers from Missouri and other nearby states. Applicant does not manufacture any products and does not sell any tangible personal property; it only provides services to customers. Anodizing involves bathing the metal parts in a hot or cold acid bath that carries an electrical current. Applicant also cleans metal parts by acid etching in a bath, bead blasting in a chamber, or by alkaline baths. Electroplating involves adding zinc, tin, or nickel to an electrically charged tank of liquid solution and bathing the metal parts in the solution. Little material is left on the parts after cleaning and electroplating, with residues typically measuring in the range of tenths to hundred-thousandths of an inch.
ISSUE 1:
Should Applicant collect and remit sales tax from its customers on its services of anodizing, electroplating, etching, and cleaning of metal parts?
RESPONSE 1:
No. Applicant should not collect and remit sales tax from its customers on its services of anodizing, electroplating, etching, and cleaning of metal parts. Section 144.020.1(1), RSMo, imposes a tax upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in the state of Missouri. Section 144.020.1, RSMo, specifically enumerates what types of services are taxable. Services that are not enumerated in Section 144.020, RSMo, are not taxable.
Applicant is in the business of providing anodizing, electroplating, etching, and cleaning services of metal parts. Anodizing, electroplating, etching and cleaning services are not enumerated as taxable services in Section 144.020, RSMo. Therefore, Applicant should not collect and remit sales tax from its customers on those services.
ISSUE 2:
Is Applicant required to pay sales tax on its purchases of chemicals and supplies used in the provision of services to its customers?
RESPONSE 2:
Yes. Applicant is required to pay sales tax on its purchases of chemicals and supplies used in the provision of services to its customers.
Section 144.020.1(1), RSMo, imposes a tax upon every sale at retail of tangible personal property in this state. Section 144.610.1, RSMo, imposes a tax upon the storage, use or consumption in this state of tangible personal property. Section 144.054.2, RSMo, exempts from state sales tax and state and local use tax:
Electrical energy and gas, whether natural, artificial, or propane, water, coal, and energy sources, chemicals, machinery, equipment, and materials used or consumed in the manufacturing, processing, compounding, mining, or producing of any product, or used or consumed in the processing of recovered materials, or used in research and development related to manufacturing, processing, compounding, mining, or producing any product.
Section 144.054.1(1), RSMo, defines "processing" as "any mode of treatment, act, or series of acts performed upon materials to transform or reduce them to a different state or thing, including treatment necessary to maintain or preserve such processing by the producer at the production facility[.]"
In Mid-America, Dairymen, Inc. v. Director of Revenue, 924 S.W.2d 280 (Mo. banc 1996), the Missouri Supreme Court discussed the term processing:
[T]he meaning of the term "processing" is ordinarily included within the meaning of the more general and inclusive term "manufacturing." State ex rel. Union Elec. Co. v. Goldberg, 578 S.W.2d 921, 924 (Mo. banc 1979). It is appropriate, therefore, in fully defining "processing," to draw on the terms we have used . . . in Galamet [Galamet Inc. v. Director of Revenue, 915 S.W.2d 331 (Mo. banc 1996)] to define "manufacturing." Furthermore, in adopting these terms from Galamet, we arrive at a definition that is consistent with the earlier definitions from Goldberg and McKinley Iron [McKinley Iron, Inc. v. Director of Revenue, 888 S.W.2d 705 (Mo. banc 1994)]. It is a definition that fills in where we left off in McKinley Iron by characterizing the "end product" sought to be produced as an article with a use, identity, and value different from the use, identity, and value of the original.
Id. at 282. In other words, as expressed by the Court in defining "processing," if the activity at issue is not manufacturing, it cannot be processing.
Section 144.020, RSMo, imposes a sales tax on sales of tangible personal property when title passes to purchasers for their use or consumption and not for resale. Under Section 144.010.1(13), RSMo, the sales of chemicals and supplies to Applicant are subject to sales tax as Applicant uses these items in performing its services and does not resell them. Section 144.610.1, RSMo, imposes a tax upon the storage, use or consumption in this state of tangible personal property. Therefore, when Applicant purchases these items out of state where tax is not paid at the time of purchase, Applicant must pay consumer's use tax because it is the ultimate user of the items.
Applicant concedes that its activities are not manufacturing. Consequently its activities cannot be processing either, according to the Missouri Supreme Court in Mid-America Dairymen. Therefore, Applicant's purchases of chemicals are not exempt under Section 144.054, 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 Associate Counsel J. Ross Shelton, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Trish Vincent