Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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440.0000 PROPERTY USED IN MANUFACTURING—Regulation 1525

Annotation 440.0020

(a) MANUFACTURING AIDS

(1) In General

440.0020 Basic Application of Tax. The tax applies to the sale of any manufacturing aid which the manufacturer uses before passing title thereto to his customer.

An important consideration to the taxability of any sale is whether the purchaser of the property sold sells it before he uses it or sells it after he uses it, or purchases it in the capacity of agent. Where property is used before it is sold, the tax applies upon the sale to the user. Where the property is sold before it is used, the sale to the person who sells it before use is not taxable since it is a sale for resale.

Where the person who uses tooling or other manufacturing aids purchases it as agent of another, the sale to the agent is taxable for that is a sale to the principal, but there is no further tax due when following use the agent turns over the tooling or other aid to his principal, since there can be no sale between a true agent and his principal.

If there is more than one retail sale of tooling, the tax applies to each retail sale, unless for some other reason there is an exemption such as the exemption of sales to the United States. 1/31/51.