Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013

Sales and Use Tax Annotations

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Annotation 440.1895


(1) In General

440.1895 Solvents Used in Microfilm Manufacture. The manufacture of microfilm involves the use of several solvents, some of which remain in the finished product by intent as it improves the quality of the image produced by the film.

Generally, solvents used to create the base or "subbing" coat will be taxable as manufacturing aids as they perform their function during the manufacturing process and may remain in the finished product only because it is not practical to remove them and their presence does no harm. Other solvents used in the photo-sensitive layer are intended to remain and do remain in the finished product, although only in minor amounts, i.e., 0.5% to 1%, with the remainder used to create the base coat and then evaporating in the drying process. Two court cases have established that if some portion of a chemical is purchased for incorporation as an active ingredient or component part of the finished product, the purchase is nontaxable despite a portion of the chemical being used in the manufacturing process and then being lost or dissipated. It is immaterial that the portion remaining is a small fraction.

Based on these facts, the following chemicals used in the manufacture of microfilm are deemed to be properly purchased for resale: 80% of the methyl ethyl ketone (20% is used in the base layers); anhydrol PM; acetone; amsco PM; glycol ether PM; methyl cellosolve. (The proportion of methyl ethyl ketone resold may vary by manufacturer.) In addition, tricresyl phosphate and epichlorhydrin become part of the top layer and may be purchased for resale. Hydrochloric acid and phosphoric acid, although present in the top layer, are undesired and, as much as possible, removed from the finished product. They are subject to tax. 2/23/90.