SALT Report 3878 –The Indiana Department of Revenue has released a letter ruling regarding the protest from a manufacturer as to whether or not they should have to pay sales and use tax on certain materials they deem to be used within the manufacturing process of goods.
They stated that “’The fact that particular property may be considered essential to the conduct of the business of manufacturing because its use is required either by law or by practical necessity does not itself mean that the property has an immediate effect upon the article being produced.’ Moreover, 45 IAC 2.2-5-8(j) states that ‘tangible personal property used in… safety or fire prevention equipment which does not have an immediate effect on the product’ are subject to tax. “
Taxpayer’s protest is sustained in part and denied in part. Taxpayer’s protest to the imposition of use tax on the “ductwork” and “smog hog(s)” is sustained, as discussed in subpart B(2). Taxpayer’s protest to the imposition of use tax on the “tapper chutes” is sustained, as discussed in subpart F. Taxpayer’s protest to the imposition of use tax on its rental of four forklifts designated as “forklifts PC” is sustained, as discussed in subpart G(2). In all other respects, Taxpayer’s protest is denied.
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