Current through Register Vol. 49, No. 18, September 16, 2024
as Defined in Section
144.030,
RSMo
PURPOSE: Section 144.020.1(1), RSMo, taxes the retail
sale of tangible personal property. Section 144.030.2(2), RSMo, exempts
materials that become a component part or ingredient of new personal property
which is intended to be sold ultimately at retail. Sections 144.030.2(4) and
(5), RSMo, exempt certain machinery, equipment, and parts for replacement or
for a new or expanded plant. This rule explains the taxation rules for
commercial printers and what elements must be met to qualify for these
exemptions. This rule does not address the exemption relating to newspaper
publishing contained in section 144.030.2(8), RSMo, or the exemption relating
to advertising contained in section
144.034,
RSMo.
(1) In general, sales
of printed product by commercial printers are subject to tax. Purchases of
materials and supplies, such as paper and ink, which become a component part or
ingredient of the printed product are exempt. Other materials used by the
printer may be exempt if title or ownership to the materials transfers to the
customer. Purchases of machinery, equipment and parts for replacement or for a
new or expanded plant are exempt if directly used in the manufacturing process.
This includes printing presses and plates.
(2) Definition of Terms. See Definition of
Terms in
12 CSR 10-111.010
Machinery and Equipment Exemptions.
(3) Basic Application of Tax.
(A) Sales of printed products-A business
engaged in printing publications, pamphlets, catalogues, leaflets, advertising
circulars, stationery and other similar products, is creating new tangible
personal property and is subject to tax on the total gross receipts from its
sales. No deductions are allowed for preparing copy, artwork, compositions,
phototypesetting or any other services or labor that are included in the charge
to produce the final product.
(B)
Ingredients and component parts-Purchases of material and supplies such as
paper and ink may be purchased tax exempt by printers as ingredients or
component parts under section 144.030.2(2), RSMo.
1. Chemicals that blend with and become part
of the ink mixture are exempt, including:
A.
The fountain solution that blends with the ink at the press to keep the
non-image area clean of ink while printing;
B. Chemicals used on the rollers to keep the
ink from drying out;
C. Isopropyl
alcohol to keep the ink wet on the rollers; and
D. Ink anti-stain used to keep the ink from
bleeding onto other printed material.
(C) Purchases of materials, including film,
used by the printer in its manufacturing process do not qualify for the sale
for resale exclusion unless title or ownership to such materials is transferred
to the customer. Whether title passes is based on the intent of the parties, as
evidenced by all relevant facts, including written agreements, course of
dealing or usage of trade and availability of the materials for future use by
the customer.
(D)
Chemicals-Chemicals to develop the film and plates are exempt if they become an
ingredient or component part of materials resold to the customer.
(E) Supplies and Parts.
1. Perforation devices consumed in a single
production cycle are not exempt as machinery and equipment or parts.
2. Perforation devices benefiting more than
one production cycle are exempt as parts of machinery and equipment.
3. Blankets and necessary attachments are
exempt as parts of machinery and equipment.
4. Proof paper and phototypesetting paper are
not exempt as machinery and equipment or parts.
5. Mineral spirits used as a solvent to clean
brushes, overspray and equipment are not exempt as ingredients or component
parts if used as a cleaning solvent separate from the ink. If mixed with the
ink, then the mineral spirits are exempt as ingredients or component
parts.
(4)
Examples.
(A) A commercial printer replaces
an old printing press due to obsolescence, replaces a second press due to
design change and then purchases a third press to expand its production. All
three printing presses may be purchased tax exempt under the machinery or
equipment exemptions for replacement or expanded plant.
(B) A commercial printer purchases plates and
film. The plate is exempt machinery and equipment. The printer's contract with
the customer states the negatives become the property of the customer. The film
is exempt as a component part of the negative.
(C) A commercial printer states on its sales
invoice its production labor charges for artwork, layout and design services
separate from the charges for the printed product. The printer is subject to
tax on total gross receipts including the separately stated production labor
charges.
*Original authority: 144.270, RSMo 1939, amended 1941,
1943, 1945, 1947, 1955, 1961.
