Missouri – Taxability of Two-Way Radios Used in the Production of Amino Acids

SALT Report 1776 – The Missouri Department of Revenues issued a Letter Ruling regarding a Taxpayer’s purchases of new and replacement two-way radios. The Taxpayer produces amino acids and recycles the waste material that results from the manufacturing process for later use. The two-way radios are used by control room staff and technicians to communicate manufacturing specifications, measuring and testing requirements, directions to open and close pressurized valves and tanks, and to alert the operators of any problems or changes that may occur during the creation of the product.  Every worker in the Taxpayer’s production facility is required to carry a two-way radio as they are used instead of telephones because two-way radios allow the immediate transfer of information.

Missouri provides an exemption from state sales and use tax under section 144.054.2, RSMo for, “machinery, equipment, and materials used or consumed in the manufacturing, processing, compounding, mining, or producing of any product, or used or consumed in the processing of recovered materials….”

The Department determined that because the Taxpayer uses the two-way radios to transfer information while manufacturing amino acids and during the waste materials recycling process they are exempt from state sales and use tax and local use tax. However, they are subject to local sales tax.

For Further Information:

Missouri Department of Revenue – Letter Ruling LR 7158