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Tax Cybrary
Air Apparent – Ohio Finds Compressed Air Tangible and Taxable
“How many ways can taxes or exemptions exist?” was the question raised by a company that sells and distributes industrial air compressors and related parts, supplies and services. The company requested an opinion from the Ohio Tax Commissioner regarding the taxability of a new venture to supply compressed air at their customers’ places of business. The two key questions were:
- Should the compressed air supply be treated as tangible personal property or as a service?
- What conditions would warrant a taxable or exempt transaction?
The main market place for this new service is manufacturers. The opinion indicates that compressed air falls under the definition of the tangible personal property and is therefore taxable. However, the Ohio statutes provide an exemption for items primarily used in a manufacturing operation. Customers providing a valid and complete exemption certificate would not be subject to tax on these transactions.
The full text can be accessed on the Ohio Department of Taxation Website. (PDF)
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