Arkansas – In-Process Storage Tanks Do Not Qualify For Manufacturing Machinery and Equipment Exemption

SALT Report 3845 – There were rocks going in and there were rocks coming out. No manufacturing for you. The Arkansas Department of Finance and Administration in Revenue Legal Counsel Opinion Number 20140817S dated June 21, 2016 concluded that the purchase of in-processes storage tanks (IPSTs) are not considered manufacturing and therefore not exempt from tax. In order to be considered manufacturing and qualify for a manufacturing machinery and equipment exemption, a raw material must be changed or transformed into a new and different article. The raw material in question was big rocks at the beginning and little rocks at the end. The Department relied in part on a recent conclusion drawn in Walther v. Carrothers Constr. Co. of Arkansas, LLC decided May 16, 2016 (SALT Report 3821). In the Carrothers case there was water going in and there was water coming out.

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