- 2 -
|
ABOUT THE EXEMPTION FOR INTEGRATED PRODUCTION MACHINERY & EQUIPMENT
WHO MAY USE THIS EXEMPTION? Any manufacturing or • Control pollution produced by the manufacturing or processing
processing business engaged in an integrated production operation operation at the plant or facility.
at a plant or facility located in Kansas may use this certificate to
purchase, install or repair integrated production machinery and ALSO EXEMPT: All labor services to install, repair or maintain the
equipment without tax. Contractors & repairmen may also use this manufacturing machinery and equipment, and all repair parts,
certificate to purchase without tax the parts, materials and labor replacement parts, and accessories for qualified equipment. These
necessary to install, service, repair or fabricate qualified equipment. include, but are not limited to: dies, jigs, molds, patterns and safety
devices that are attached to the exempt equipment; and parts and
Examples of manufacturing or processing businesses include: accessories that require periodic replacement such as belts, cutting
Chemical production; electrical power generation; the fabrication
bars, drill bits, grinding balls and wheels, saws; and refractory brick
of automobiles, airplanes, machinery or transportation equipment;
and other refractory items for exempt kiln equipment used in
the fabrication of metal, plastic, wood or paper products; newspaper production operations.
printing; petroleum refining; water treatment; wholesale bottling;
etc. Also included are agricultural commodity processing operations TAXABLE TEMS I NCLUDE I BUT ARE ( NOT LIMITED TO):
(such as meat packing, frozen food processing, and the operations
of a grain storage facility) and operations at a mineral (oil, gas, • Machinery and equipment used for non-production purposes,
stone, sand, etc.) extraction site to clean, separate, grind or such as accounting, administration, advertising, employee
otherwise treat or prepare the product before its transmission to a work scheduling, fire prevention, first aid, marketing, plant
refinery or for other wholesale or retail distribution. cleaning, plant communications, plant security, record keeping,
or sales and other related activities. Also taxable are
Non-industrial businesses whose operations are primarily (more computers and related peripheral equipment not used directly
than 50%) retail, and produce or process tangible personal property and primarily to control or measure the manufacturing process,
as an incidental part of the retail business may NOT use this or furniture and other furnishings (e.g., office equipment).
certificate. Retailers who may not use this certificate include:
• Machinery, equipment and tools used primarily to maintain or
contractors who alter, service or repair real property; grocers who
butcher or dress livestock or poultry; and retailers who bake, cook repair any type of machinery and equipment, or the building
or plant;
or prepare food products in the regular course of their retail trade.
• Transportation, transmission and distribution equipment not
WHAT IS INTEGRATED PRODUCTION MACHINERY & primarily used in the production, warehousing or material
EQUIPMENT? To qualify as integrated production equipment, the handling process, such as the conveyance of natural gas,
item must be an integral or essential part of a process to electricity, oil or water, and related equipment located outside
manufacture, process, fabricate, finish, or assemble items for the plant or facility;
wholesale or retail distribution. • Buildings (other than exempt machinery and equipment that
becomes a structural part of the building) and other real estate
EXEMPT ITEMS INCLUDE (BUT ARE NOT LIMITED TO) MACHINERY AND not otherwise exempt, and building fixtures not integral to the
EQUIPMENT USED TO: manufacturing operation, such as utility systems for heating,
• Receive, transport, convey, handle, treat or store raw materials ventilation, air conditioning, communications, plumbing or
in preparation for their placement on the production line; electrical;
• Transport, convey, handle or store the property undergoing • Machinery and equipment used for general plant heating,
manufacture at any point from the beginning to the end of the cooling and lighting;
process occurring at the plant or facility; • Motor vehicles that are registered to operate on public
• Act upon, effect, promote or otherwise facilitate a physical highways;
change to the property undergoing manufacturing or • Employee apparel, except safety and protective apparel that
processing; is purchased by the employer and furnished without charge
• Guide, control or direct the movement of property undergoing to those employees who are involved in production or research
manufacturing or processing; activities; or
• Test or measure raw materials, the property undergoing • Machinery and equipment used in mining, gas and petroleum
manufacturing or processing, or the finished product as drilling, water drilling, quarrying, sand and gravel extraction
necessary by the production operation; operations, and other similar activities to explore for or extract
petroleum, gas, mineral, rock, sand, water, and other minerals
• Plan, manage, control, or record the inventories of raw materials, or similar matter from below the surface of the soil or water or
consumables, component parts, and the finished product; from a mine.
• Produce energy for, lubricate, control, or otherwise enable
the function of other production equipment; ADDITIONAL INFORMATION. A more complete discussion of
• Package the product; this sales tax exemption is in the Kansas Department of Revenue’s
• Transmit or transport electricity, coke, gas, water, steam or Notice 00-08, Kansas Exemption for Manufacturing Machinery &
similar substances used in production from the point of Equipment as Expanded by K.S.A. 79-3606(fff). This notice is
generation (if produced at the plant site), or from the point available by calling 785-368-8222 or from our web site:
where it enters the plant or facility (if purchased or delivered www.ksrevenue.org.
offsite), to the production operation; RETAINING THIS CERTIFICATE. Sellers should retain a
• Cool, heat, filter, refine or otherwise treat water, steam, acid, completed copy of this certificate in their records for at least three
oil, solvents or other substances used in production operations; years from the date of sale. A seller is relieved of liability for the
• Provide and control an environment required to maintain tax if it obtains a completed exemption certificate from a purchaser
certain levels of air quality, humidity or temperature in special with which the seller has a recurring business relationship. A
and limited areas of the plant or facility where such regulation certificate need not be renewed or updated when there is a
is part of and essential to the production process; recurring business relationship between the buyer and seller. A
• Treat, transport or store waste or other by products of the recurring business relationship exists when a period of no more
production process at the plant or facility; or than 12 months elapses between sales transactions.
|