Sales Tax State Activity Update -October 2008

First aid kit does not get a band-aid from Sales Tax exemption in Missouri

The Missouri Department of Revenue has issued Letter Ruling 5032 to clarify the taxability of first aid items, over the counter drugs, and safety items sold to manufacturers. Pursuant to the state’s sales and use tax law section 144.054.2, manufacturing exemption applies to equipment and materials “used or consumed in the manufacturing, processing, compounding, mining, or producing of any product.” Thus, the following items are ruled accordingly;

1.Over-the-counter drugs and first aid items such as ibuprofen, aspirin, alcohol, swabs, gauze, bandages, and eye wash and are not exempt from state sales or use tax or local use tax because they are considered tangible personal property and are not used or consumed in the manufacturing, processing, compounding, mining, or producing of any product.

2. Safety glasses, gloves and protective clothing may be exempt from sales and use tax and local use tax, but not local sales tax depending on their usage. If the safety glasses, gloves or protective clothing are required to be worn during the manufacturing, processing, compounding, mining, or producing of a product, then it is deemed exempt from state sales and use tax and local use tax. However, the sale remains subject to local sales tax.

Upon the Sales tax exemption, Sales tax exemption certificate should be obtained from the purchaser and verify the intended use is in the actual manufacturing, processing, compounding, mining, or production of any product. The Applicant should act in good faith when accepting an exemption certificate, or both the applicant and purchaser are faced with liability for the sales tax.

This ruling may be viewed at the Missouri Department of Revenue. (Missouri Department of Revenue, LR 5032, August 19, 2008)

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