Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
315.0000 INSTALLING, REPAIRING, RECONDITIONING IN GENERAL—Regulation 1546
(a) IN GENERAL
315.0290 Re-Covering Lithographic Printing Rollers. A company requested information regarding the sales or use tax application to re-covering lithographic printing rollers. The repair process is described as follows:
(1) The roller is picked up at the company's place of business.
(2) The old rubber cover is removed from the steel core.
(3) If bearings are present, they are removed. The core is sandblasted and cleaned. If the journals need to be repaired, the roller core is sent to an outside machine shop for repair.
(4) The core is prepared to accept the rubber compound, which is applied in the proper thickness.
(5) The core and rubber covering are put into a furnace and cured for the appropriate time.
(6) The roller is machined or ground to specification.
(7) The roller is wrapped and prepared for return.
It is assumed that the new roller cover is custom made and is fabricated at the time the roller is refurbished rather than one which is merely pulled from existing stock. It is also assumed that most of the charge for the repair of the journals is labor, that few new parts are put in, and that the journals are mostly inspected and cleaned.
The reference to a "rubber compound" and the need to use the compound indicates that the refurbishers fabricate a new cover from raw stock. Consequently, steps 4 and 5 are steps that result in the creation or production of tangible personal property, and the labor charges are considered taxable fabrication labor. In step 3, the removal and presumably, the replacement of the bearings would be considered repair and installation labor. The repair of the metal journals appears to be a process that takes place, if necessary, whether or not a custom or ready-made cover is used. From the statement that the greater amount of the repair bill for the journals or roller end is labor, it appears that the charges for the job are repair labor. The sandblasting and cleaning of the core would be considered non-taxable repair labor if a ready-made cover were used but a step in the production of tangible personal property if a custom cover is used. The charges for removal and replacement of the bearings (step 3) and steps 1, 2, 6 and 7 are nontaxable repair and installation labor. Based on the facts supplied, the refurbishment of the roller ends or journals appears to be nontaxable repair labor. 9/5/90; 2/5/91. (Am. 2001–3).