Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2016
Sales and Use Tax Annotations
440.0000 PROPERTY USED IN MANUFACTURING—Regulation 1525
(b) PROPERTY BECOMING COMPONENT PART OF FINISHED PRODUCT
(4) Miscellaneous Specific Components
440.3050 Kerosene Distillate. Taxpayers may purchase kerosene distillate for resale without incurring a use tax liability although the distillate is injected into wells for well stimulation during the process of producing crude oil. Such distillate is resold as part of the crude oil to the extent that the distillate is recovered and is not dissipated as waste in the process. The critical factor is that to meet the viscosity requirements of the purchaser, as provided by the purchase contract, the distillate must be incorporated as a diluent with the heavy crude oil. While the distillate does provide a beneficial effect in the well stimulation process, the distillate must be included in the crude oil sold to meet contract specifications. Accordingly, the primary purpose for which the distillate is purchased is for resale. 10/29/85.