Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
440.0000 PROPERTY USED IN MANUFACTURING—Regulation 1525
(a) MANUFACTURING AIDS
(7) Miscellaneous Specific Aids
440.0950 Celluloid Tapes and Reels as Containers. In manufacturing printed circuit boards, integrated circuits and other components placed on the board are placed between two layers of celluloid tape and wound around a reel. The placement machinery then separates the two layers of celluloid tape and places the components on the board at the desired location. The celluloid tapes are discarded. The reels may be recycled or scrapped.
When the entire package of the celluloid tapes and reels are purchased together with the components from the supplier of the components in a completed form, the celluloid tapes and reels are containers and the package may be purchased by the manufacturer of the circuit boards for resale. However, when the components are purchased from one supplier and the manufacturer separately purchases the celluloid tapes and reels, the manufacturer is the consumer of the tapes and reels and may not purchase them for resale. Further, if the insertion of the components into the celluloid tape and the mounting of the reels is sub-contracted to a third party, the charges represent fabrication of a manufacturing aid and as such are subject to tax.
If the manufacturer retains title to the tapes and reels, a separate charge for mounting the integrated circuits on the reels and tapes to their customers is not taxable if the circuit boards are sold for resale. If the circuit boards are sold at retail, such charges are includible in the taxable gross receipts. 8/30/93.