The Missouri Department of Revenue ("DOR") recently determined that sampling sponges used in meat manufacturing were taxable while ammonia, refrigeration chemicals, and freezer equipment were exempt. The manufacturer slow-cooled ready-to-eat (RTE) meat after cooking and curing. The manufacturer used large freezers designed to chill food at precise temperatures and keep the processing environment safe from bacteria and contamination. The manufacturer also purchased sampling sponges to spot check and sample food contact surfaces for possible contamination.
Missouri exempts equipment and machinery directly used in the manufacturing or processing of a product. "Manufacturing" only includes processes that make a change in the manufactured products. The DOR concluded that sampling sponges did not result in a change in the processed RTE meat products, so sponge purchases were taxable. However, the chilling process was necessary to prevent contamination in processing the meat products and put the meat in its completed form. The manufacturer directly used the freezer equipment to cool the meat. So, freezer equipment, replacement machinery, and parts were eligible for exemption.
Missouri also exempts chemicals used or consumed in the manufacturing or processing of any product. The chilling process required the use and consumption of ammonia and refrigeration chemicals. Since the chilling process was part of the manufacturing process, the ammonia and refrigeration chemicals were eligible for exemption. The manufacturing chemical exemption does not apply to local sales taxes.