Leases of Shipping Pallets May Qualify for Manufacturing Equipment Exemption in Kansas

Monday, August 26th, 2013

 
 
Share
Link
Kansas
General

The Kansas Department of Revenue recently issued a letter ruling on leases of returnable shipping pallets to manufacturers. These leases are not subject to tax as long as the manufacturer uses the pallets more than 50% of the time for exempt manufacturing activities.

Sales of returnable pallets are taxable unless they qualify for the manufacturing equipment exemption. Note that sales of nonreturnable pallets are exempt. The manufacturing exemption applies to equipment used to transport, convey, handle, or store the manufactured product at any point from the beginning of the production line through any warehousing or distribution operation of the product that happens at the manufacturing facility. A pallet must be used for these exempt activities more than 50% of the time to qualify for this exemption. If a returnable pallet does not qualify for this exemption, its sale is taxable.

The lease of a pallet is not taxable if the sale of the pallet would not be taxable. Therefore, if the manufacturer will use the pallet for exempt activities more than 50% of the time, the lease is exempt. To claim this exemption, the manufacturer must provide the lessor with a completed Integrated Production Machinery and Equipment Exemption Certificate (form ST-201). If the manufacturer does not use the returnable pallet for exempt activities, the lease is subject to tax.

http://rvpolicy.kdor.ks.gov/Pilots/Ntrntpil/IPILv1x0.NSF/ae2ee39f7748055f8625655b004e9335/1a95778597ac433f86257bcd0053b74e?OpenDocument


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

Service Repairs to Petroleum Storage Tanks Exempt in...

Friday, January 18th, 2019 -Louisiana's Board of Tax Appeals recently ruled that repairs on petroleum storage tanks were not taxable. ...

Nevada Exempts Feminine Hygiene Products in 2019

Wednesday, January 16th, 2019 -Last year, Nevada voters approved via ballot measure changes to the Sales and Use Tax Act of 1955. Voters amen...

Cleaning of Beer-Tap Lines Not Taxable in Ohio

Monday, January 14th, 2019 -The Supreme Court of Ohio recently ruled that cleaning beer-tap lines is not taxable. The taxpayer was...

Louisiana Court of Appeals Finds Marketplace Facilitators...

Friday, January 11th, 2019 -The Louisiana Court of Appeals has recently addressed the sales tax liability of marketplace facilitators. A c...

Iowa Supreme Court Determines Taxable Carpentry Services...

Wednesday, January 9th, 2019 -The Iowa Supreme Court has recently addressed the taxability of various installation services. The taxpayer wa...

Tax Applies to Metallurgical Coke in Illinois

Monday, January 7th, 2019 -Illinois recently ruled that use tax was due on purchases of metallurgical coke. The taxpayer was a business t...