Mo. Code Regs. tit. 12 § 10-110.601
Current through Register Vol. 49, No. 21, November 1, 2024.
Section 12 CSR 10-110.601 - Electrical, Other Energy and Water as Defined in Section 144054, RSMoPURPOSE: Section 144.054.2, RSMo, exempts from state tax and local use tax, but not local sales tax, electricity, gas (natural, artificial, or propane), water, coal, and energy sources used or consumed in manufacturing, processing, compounding, mining or producing any product or used in research and development related to manufacturing, processing, compounding, mining or producing any product or in the processing of recovered materials. This rule explains when this exemption applies and how a taxpayer may claim the exemption at the time of purchase.
(1) In general, purchases of electricity, gas (natural, artificial, or propane), water, coal, and energy sources used or consumed in manufacturing, processing, compounding, mining or producing any product, or used or consumed in the processing of recovered materials, or used in research and development related to manufacturing, processing, compounding, mining or producing any product are exempt from state tax and local use tax, but not local sales tax.(2) Definition of Terms.(A) Compounding-Producing a product by combining two (2) or more ingredients or parts.(B) Energy source-Those resources, such as petroleum, coal, gas, wind, steam, nuclear fuel and sunlight, from which energy is produced.(C) Fabrication-See 12 CSR 10-111.010.(D) Manufacturing-See 12 CSR 10111.010.(E) Material recovery processing plant- See 12 CSR 10-111.060.(F) Mining-See 12 CSR 10-111.010.(G) Producing-See 12 CSR 10-111.010. (H) Recovered materials-See 12 CSR 10111.060.(3) Basic Application of Exemption.(A) A taxpayer may claim the exemption for state tax and local use tax, but not local sales tax at the time of purchase. A taxpayer may not claim an exemption from local tax and then remit the tax directly to the department. It is the seller's responsibility to collect and remit the proper amount of local tax to the department.(B) Purchases reported to the department under direct pay and Electrical Energy Direct Pay (EEDP) are exempt from the application of subsection (3)(A) of this rule.(C) The energy source and water that is subject to this exemption is not required to be directly used in the process for which the exemption is being claimed. There is also no requirement that the energy source and water comprise ten percent (10%) of the cost of a primary or secondary production process in order to qualify for this exemption. There is also no requirement that twenty-five percent (25%) of the raw materials be recycled in order for the purchaser to claim this exemption.(4) Method of Collection and Apportionment (A) Energy and water vendors are responsible for remitting tax to the department. Purchasers are responsible for informing energy vendors on the MO-149 (Sales/Use Tax Exemption Certificate) of the percentage of energy used for activities exempt under section 144.054, RSMo. The purchaser may use any reasonable method to calculate this percentage, such as square footage or reference to a use analysis. The exemption will be applied as follows: Purchaser's Calculated
Exempt PercentagePercentage Exempt 76-100 100
51-75 75
26-50 50
1-25 25
00
(B) Beginning on August 28, 2007 and ending on January 31, 2008, any vendor who receives an exemption certificate exempting sales of electricity, gas (natural, artificial, or propane), water, coal, and energy sources used or consumed in manufacturing, processing, compounding, mining or producing any product, or used or consumed in the processing of recovered materials, or used in research and development related to manufacturing, processing, compounding, mining or producing any product after the bill was issued may take the correction as an adjustment on its sales tax return provided the net result is not a negative figure. In the event an exemption certificate is received after January 31, 2008, and an exemption was due and not properly applied by the vendor, the vendor may submit a refund request to the department.(5) Exempt Examples. (A) A manufacturer purchases propane to operate forklifts that move raw materials to production lines, move work-in-process between production steps, move finished goods to an on-site storage area, and to load finished goods on trucks for shipment from the plant. The fuel is exempt from state tax and local use tax, but not local sales tax.(B) A manufacturer uses electricity to run its equipment, maintain a moderate temperature in its production facility and light the plant. The purchase of all of its electricity is exempt from state tax and local use tax, but not local sales tax, because it is used or consumed in producing a product.(C) A manufacturer uses coal to fuel boilers to generate steam used to manufacture a product. The purchase of the coal is exempt from state tax and local use tax, but not local sales tax, because it is used or consumed in producing a product.(D) A manufacturer purchases compressed gas used for welding a product. The purchase of the compressed gas is exempt from state tax and local use tax, but not local sales tax because it is used or consumed in producing a product.(E) A manufacturer uses water to cool a product during the manufacturing process. The water is exempt from state tax and local use tax, but not local sales tax.(F) A manufacturer preserves its final product in a warehouse located at the production facility awaiting shipment. The purchase of energy to maintain the desired environment and provide lighting is exempt from state tax and local use tax, but not local sales tax.(G) A construction company that has been deemed a manufacturer purchases fuel to be used in a concrete ready-mix truck. The fuel is subject to motor fuel tax; however if a refund claim is made, the refund will be exempt from state tax and local use tax, but not local sales tax, because the fuel is used in producing a product.(6) Taxable Examples. (A) A restaurant preparing food for immediate consumption is not exempt as a manufacturer. Therefore, all state and local taxes apply. AUTHORITY: section 144.270, RSMo 2000 and 144.054, RSMo Supp. 2007.* Emergency rule filed Aug. 14, 2007, effective Aug. 28, 2007, expired Feb. 23, 2008. Original rule filed Aug. 14, 2007, effective March 30, 2008. *Original authority: 144.054, RSMo 2007; and 144.270, RSMo 1939, amended 1941, 1943, 1945, 1947, 1955, 1961.