Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 440.0735


(6) Food and Beverage Processing

440.0735 Transfer Paper. Transfer paper is used in the textile manufacturing process. According to the taxpayer, it is paper which is treated with a special chemical. According to the supplier of the transfer paper, the chemical's role is purely that of a catalyst. The taxpayer maintains that the chemical adds a sheen to the fabric and it also helps prevent snagging of certain sheer polyester.

Mere physical presence in a finished product is an insufficient basis for exemption. The available evidence is that the primary purpose of the transfer paper is as a manufacturing aid to facilitate the transfer of a design from a silk screen to the fabric. After the process is completed the paper is discarded. There is no evidence that the chemical contained in the paper is in the fabric or the paper which is discarded. Even if some of the chemical appears in the fabric, it appears that it is incidental and the transfer paper is a necessary element in the heat transfer process. 4/30/90.