Current through Register Vol. 50, No. 6, March 17, 2025
PURPOSE: Section 144.054.2, RSMo, exempts
from state tax and local use tax, but not local sales tax certain materials,
goods, machinery and parts. This rule explains the requirements for this
exemption.
(1) In
general, purchases of electricity, gas (natural, artificial, or propane),
water, coal, and energy sources, chemicals, machinery, equipment and materials
that are used or consumed in the manufacturing, processing, compounding, mining
or producing a product are exempt from state tax and local use tax, but not
local sales tax. Local sales tax applies to these transactions.
(2) Basic Application of Exemption.
(A) Electricity, gas (natural, artificial, or
propane), water, coal, and energy sources, chemicals, machinery, equipment and
materials that are used or consumed in manufacturing, processing, compounding,
mining or producing a product are exempt from state tax and local use tax, but
not local sales tax. It is not necessary for the item purchased to be used
directly in manufacturing, processing, compounding, mining or producing a
product in order to qualify for the exemption.
(3) Examples.
(A) A toy manufacturer purchases sandpaper to
use in the manufacturing of wooden rocking horses. The purchase of sandpaper is
exempt from state tax and local use tax, but not local sales tax because it is
a material that is consumed in producing a product.
(B) An automobile manufacturer purchases soap
to wash all automobiles as they leave the manufacturing plant. The soap
qualifies as a material used or consumed in manufacturing and is exempt from
state tax and local use tax, but not local sales tax.
(C) A steel fabricator purchases gases for
use in fabricating a product out of steel plates. The gases that are consumed
in the fabrication process are exempt from state tax and local use tax, but not
local sales tax, because they are consumed in producing a product.
(D) A foundry creates a steel product by
casting molten steel. After casting, a cleaning solution is poured over the
product to remove impurities from the surface. The solution is used or consumed
in the producing of a product and is exempt from state tax and local use tax,
but not local sales tax.
(E) A
metal container manufacturer purchases coolants, hydraulic fluids, greases and
oils for use in machines that are used to shape the product. Catalysts and
acids are also purchased to interact with and clean the product being
manufactured. The coolants, hydraulic fluids, greases, oils, catalysts and
acids are exempt from state tax and local use tax, but not local sales
tax.
AUTHORITY:
section 144.270, RSMo 2000.* Emergency
rule filed Aug. 14, 2007, effective Aug. 28, 2007, expired Feb. 23, 2008.
Original rule filed Aug. 14, 2007, effective March 30,
2008.
