Missouri Manufacturing of Manufacturing Replacement Parts Exempt

In a Sales and Use Tax Ruling the Missouri Department of Revenue ruled equipment, parts, materials and supplies used in a tool room to manufacture replacement parts for its manufacturing machinery are exempt from Missouri’s Sales and Use tax. Pursuant to Sec. 144.054.2, such machinery, equipment and materials used or consumed in the manufacturing process are exempt from the sales and use tax.

Background

A Missouri corporation that manufactures electronic connecters seeks a ruling for its purchases of equipment, parts, materials, and supplies used to manufacture replacement parts. Additionally, the corporation wants to know if utilities used in the tool room to manufacturing the parts are exempt under Section 144.054.

Ruling

Under section 144.054, the purchases of equipment, parts, materials, supplies as well as the utilities used in the manufacturing of replacement parts are exempt. However, utilities used to repair the corporation’s tool room equipment are not exempt because it is not consumed in the manufacturing of the replacement parts. Therefore the corporation has to calculate the percentage of the utility that are used for exempt activities accordingly.

To learn more about this letter ruling visit the Missouri Department of Revenue Website.