SALT Report 2686 – The Mississippi Legislature recently amended section 27-65-11 of the Tax Code to reflect that the definitions of “to manufacture” and “manufacturing” now apply to the certain activities performed by scrap metal recyclers.
As a result of this change, scrap metal recyclers now qualify for the reduced sales tax rate of 1.5% on their purchases of manufacturing machinery, manufacturing parts, electricity, current, power, steam, coal, natural gas, liquefied petroleum gas, or other fuels used in the manufacturing process, effective July 1, 2013.
To qualify for the reduced rate, the scrap metal recycler must be in the business of converting materials into a more useful product, such as a specification-grade commodity by processing the metal into separate types, removing waste material, and/or cutting, chipping, sorting, sizing, or shaping the material into a usable product for sale.
Qualified scrap metal recyclers are required to apply for a direct pay permit. Once the direct pay permit has been issued it must be provided to all vendors for all qualified purchases. The recycler will be required to self-accrue the correct rate of tax once the permit is issued.
The reduced tax rate does not apply to sales that occur prior to July 1, 2013, even if the customer is billed after that date.
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