Current through Register Vol. 42, No. 11, August 30, 2024
(1) Purchases of machines by paper
manufacturers to be used in manufacturing, processing, or compounding tangible
personal property and purchases by paper manufacturers of the parts,
attachments, or replacements for these machines which are
(i) made or manufactured for use on or in the
operation of the machines,
(ii)
necessary to the operation of the machines, and
(iii) customarily so used are taxable at the
reduced machine rates of sales and use tax levied in Sections
40-23-2(3) and
40-23-61(b).
Examples of tangible personal property that are taxable at the reduced machine
rate when purchased by paper manufacturers are: manufacturing machinery
(a) machine clothing - felts, screen plates,
and wire
(b) tanks to be used in
manufacturing
(c) recording
instruments attached directly to
(d) pipes, valves, pipe fittings, and pipe
fitting supplies attached to manufacturing machinery (all other pipes, valves,
pipe fittings, and pipe fitting supplies are taxable at the general rate except
for those which are used in a water treatment plant and, therefore, qualify for
the pollution control exemption in Sections
40-23-4(a)(16) and
40-23-62(18))
(e) all machinery and equipment
used to generate electricity including boilers, engines, condensers,
generators, transformers, and attachments thereto (machinery and equipment used
solely for the transmission of electricity is taxable at the general
rate)
(f) electrical equipment used
as direct controls of manufacturing machines
(g) all transformers, wherever used
(h) insulating material, both bulk and
preformed, which is applied to manufacturing machinery
(i) shafting, whether purchased prefabricated
to exact size or unfinished to be cut and machined by the purchaser, when used
on manufacturing machinery
(j)
packing, whether purchased prefabricated or in bulk form, when purchased for
use on manufacturing machinery
(k)
steam hose purchased for use as a part or attachment to manufacturing
machinery
(l) steel, steel plate,
steel angles, bushing, bronze, steel shapes, and tool steel from which machine
parts or attachments are fabricated
(m) fire clay and bulk lining
materials
(n) equipment used in
measuring, weighing, and packaging product when it is a part of the production
line machinery and is used to put the product in condition for sale
(o) computers directly linked to
manufacturing machinery and used to control or monitor manufacturing
machinery
(p) machinery used during
the manufacturing process to test or measure materials entering the
product.
(2)
Tangible personal property purchased by paper manufacturers is taxable at the
general rate of sales or use tax levied in Sections
40-23-2(1) and
40-23-61(a) unless it qualifies for the reduced automotive, manufacturing machine, or farm
machine rate of tax or for a specific statutory exemption or exclusion.
Property purchased for use in general plant maintenance, administration,
general management, or marketing is taxable at the general rate. The following
items are taxable at the general rate of sales or use tax when purchased by
paper manufacturers with certain exceptions as noted:
(a) steam hose used for cleaning purposes
including bulk purchases of steam hose of the kind which may be used either for
cleaning the plant and plant equipment or for use as an attachment to
manufacturing machinery (unless the purchaser can document that all of the
steam hose purchased in bulk was used on manufacturing machinery)
(b) bulk or preformed insulating material not
becoming an attachment to manufacturing machinery
(c) machinery and equipment used solely to
transmit electricity from the powerhouse to motor control centers on
manufacturing machinery (these items transmit electricity rather than
manufacture electricity) one-time-use container
(d) all wire, fixtures, and other materials
used in lighting
(e) baling wire
pulp for internal use
(f) skid and
anchor plates
(g) steel strapping,
when not furnished as part of a
(h)
gummed tape, when not furnished as part of a one-time-use container
(i) wooden skids
(j) pulpwood saws and saw parts (taxable at
the reduced farm machine rate when purchased for use in harvesting
timber)
(k) yard switcher repair
parts
(l) safety shoes
(m) lumber
(n) magazine subscriptions
(o) repair parts for electric
trucks
(p) office
supplies
(q) laboratory
supplies
(r) cafeteria
equipment
(s) charts used on
recording instruments that are attached directly to manufacturing
machinery
(t) tractor repair
parts
(u) paints
(v) auto, truck, and trailer repair
parts
(w) hand-operated hoists and
parts
(x) portable air compressors
and parts
(y) tools
(z) first aid supplies, fire protection
supplies and equipment, safety supplies and equipment
(aa) welding machines and parts
(bb) fuel oil
(cc) Dowicide (not taxable when it becomes an
ingredient or component part of the paper manufacturer's manufactured
product)
(dd) Nopco K. F. foam
killer (exempt when used primarily for air or water pollution control
purposes)
(ee) seedlings and
plants
(ff) repair parts for
gas-driven and electric lift trucks (new units taxable at the reduced
automotive rate)
(gg) building
materials including brick, structural steel, concrete, lumber rails, paint,
insulation materials, plumbing fixtures, and all other materials becoming a
part of a structure
(hh) pipes,
valves, pipe fittings, and pipe fitting supplies including those which are used
in drinking water lines and fire protection lines (pipes, valves, pipe
fittings, and pipe fitting supplies which are attached to manufacturing
machinery are taxable at the reduced machine rate; those which are used in a
water treatment plant qualify for the pollution control exemption in Sections
40-23-4(a)(16) and
40-23-62(18))
(ii) construction supplies
including welding rods, acetylene, oxygen, screws, nuts, bolts, and
rivets.
(3) The rates of
sales and use tax applicable to purchases of used machinery and equipment by
paper manufacturers are the same as the rates applicable to purchases of new
equipment.
(4) Exemptions and
exclusions which commonly apply to paper manufacturers include the wholesale
exclusion for purchases of materials becoming an ingredient or component part
of a manufactured product and the one-time-use containers or container
components in which the manufacturer's product is furnished, the exemption for
oils and greases otherwise taxed as lubricants, and the exemption for certain
railroad cars, vessels, and barges of over five tons load displacement.
(Sections
40-23-1(a)(9) b,
40-23-1(a)(9)
c,
40-23-4(a)(1),
40-23-4(a)(12),
40-23-60(4)
b,
40-23-60(4)
c,
40-23-62(4),
and
40-23-62(17)
Authors: Patricia Estes, Dan
DeVaughn
