Department of Revenue rule final

February 11, 2016

The Administrative Rules Review Committee met Friday, Feb. 5, to hear from state agencies on various proposed rules. Two items of interest were on the agenda for ABI member companies. First, the DNR rules establishing fees for air construction permits is final.

The next major item of interest relates to the Department of Revenue rule amending definitions for manufacturing purchases of machinery, equipment and replacement parts eligible for a sales and use tax exemption, which you have read about in previous newsletters. The rule was adopted and filed in final form Friday. 

What this means for your business? Effective July 1, 2016, all contracts entered into for sales of qualifying items will be exempt from sales and use tax. Currently a manufacturer’s machinery, equipment and replacement parts are exempt. However, the interpretation of the existing law provides many gray elements, making it difficult for companies to comply and the department to enforce. The new rules update the definition of manufacturing to better align with modern day manufacturing realities and removes arbitrary dollar and time thresholds. Watch for an update from ABI staff about specific benefits to your company.