Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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435.0000 PRODUCING, FABRICATING AND PROCESSING PROPERTY FURNISHED BY CONSUMERS—GENERAL RULES—Regulation 1526

Annotation 435.0712

(c) MISCELLANEOUS OPERATIONS

435.0712 Die Alterations. As a general rule, alterations to a used die constitute taxable fabrication labor if the altered die is used to produce a new item of property even though the property may generally be of the same type previously produced. An example would be modifying a die for a truck door to create a door for the new model year.

However, not every change in an existing die is treated as fabrication labor. The rework of a die is not taxable when some minimal change or configuration is made to the die by means of some change in the assembly of the die. That is, if a die is "programmable" in that parts can be disassembled, rearranged and reassembled, then that product is not treated as a new product, but as a previously finished product "tuned" to a new specification. If relocation of tooling parts occurs alone, this would be viewed as a nontaxable service charge. Where parts are added to the die, or where parts are physically reworked, the change constitutes taxable fabrication. Where there is relocation together with such a physical reworking of the die to cause it to be treated as a new product, the tax would apply to all charges made for changing the die. 3/19/84.