Sales Tax Articles
Sales Tax State Activity Update - January 2005
Missouri Offers Company Refund on Remand
Southwestern Bell (SBC) was entitled to a sales tax refund for items used in manufacturing that either replaced another item due to a design or product change, or items that were used to expand its manufacturing plant.
On 7/26/01, the Missouri Administrative Hearing Commission (AHC) issued its opinion denying SBC's refund claim for the sales tax paid on the various telephone system components. The company appealed the decision to the Missouri Supreme Court. The State Supreme Court subsequently issued its decision and held that SBC does "manufacture" a product (telecommunications is a product), reversing the AHC's decision and remanding the case back to the AHC for further findings of fact.
The issues on remand were whether the purchases were of machinery and equipment, and whether the materials and supplies required for the installation or construction of said equipment were used solely for that purpose. After the definitions were in place, then the topic of exemption could be discussed.
Upon remand, the AHC determined that SBC had established that the items in question were:
- Machinery and equipment, or materials and supplies solely required for the installation or construction of such machinery and equipment
- Replaced or used for the same purpose as the machinery and equipment that was replaced by reason of design or product changes or used to establish new or expand existing plants
- Used directly in manufacturing a product intended to be sold ultimately for final use or consumption
(Southwestern Bell Telephone Company, Petitioner, vs. Director of Revenue, Respondent, Missouri Administrative Hearing Commission (on remand from the Missouri Supreme Court, 10/28/04)
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