Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
435.0000 PRODUCING, FABRICATING AND PROCESSING PROPERTY FURNISHED BY CONSUMERS—GENERAL RULES—Regulation 1526
(c) MISCELLANEOUS OPERATIONS
435.0930 Irradiation of Property. The application of tax to transactions involving irradiation of property furnished by customers is as follows:
(1) When the irradiation renders the material valuable for a new and different purpose, the transaction is subject to tax under Regulation 1526 unless the customer issues to the seller a resale certificate pursuant to Regulation 1668. For example, a particular drug or chemical which is to be resold may be made radioactive so that it may be used in its radioactive state for medical treatment or diagnosis.
(2) In instances where after the irradiation the appearance of the property has changed, the seller does not know if any value has been added and does not know the customer's purpose for having the property irradiated. The transaction is subject to tax unless the customer issues to the seller a resale certificate. For example, a customer may submit gem stones for radiation and, although the radiation appears to alter the stones' color, the seller does not know if any value has been added.
(3) In instances where there is a deterioration of the property as a result of the radiation, the transaction will be regarded as taxable processing if the seller does no more than expose the property to radiation even though the property will be of lesser economic value as a result of the radiation. Only if the seller furnishes to the customer a report with respect to the effect of the radiation on the property will the transaction be treated as a nontaxable testing service. 3/25/74.