Sales Tax Articles
Sales Tax State Activity Update - July 2006
Sand by Your Man(ufacturer) in Tennessee
In a recent letter ruling, the Tennessee Department of Revenue ruled patterns were exempt for purposes of the industrial machinery exemption when used to make molds for the manufacture of tangible personal property.
The patterns were wooden boxes used to make sand molds which were the component that molten metal was poured into to create the final shape of the iron or steel casting to be sold. The patterns never come in direct contact with the final metal casting, but the casting may not be created without the pattern.
The current statutory language provides an exemption for industrial machinery, apparatus and equipment, which is " necessary to", and "primarily for", the fabrication or processing of tangible personal property for resale and consumption off the premises.
The facts that the patterns were necessary to create sand molds and had no other use were sufficient to meet the "necessary to" and "primarily for" statutory requirement for exemption.
View the complete ruling on the Tennessee Government website.
(Tennessee Department of Revenue Letter Ruling #06-07)
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