Sales Tax Articles
Sales Tax State Activity Update - January 2006
Phosphoric Acid Does Not Pass the Missouri Exemption "Acid Test"
The Missouri Department of Revenue recently issued a letter ruling to a taxpayer stating that phosphoric acid is a taxable supply when used to chemically etch the smooth steel surface of metal parts.
The taxpayer is manufacturer of rubber to bonded metal parts produced and used on its products. The phosphoric acid is sprayed onto the metal parts and the etching process it performs increases the surface area for the binding adhesive to create a stronger bond.
The Missouri sales and use tax statutes provide an exemption for machinery, equipment or parts used directly in manufacturing a product which is intended to be sold for final use or consumption. The Department determined that phosphoric acid did not meet the statutory definitions of machinery, equipment or parts to be eligible for the exemption. The phosphoric acid is a supply that does not qualify for the manufacturing exemption.
The full text of this Ruling can be viewed on the Missouri Department of Revenue website.
(Missouri Department of Revenue Letter Ruling No LR2623, 10/28/05) 01/06
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