Laundry Soap and Water Treatment Chemicals Subject to Tax in Missouri

Thursday, March 20th, 2014


The Missouri Supreme Court recently ruled that a laundry and uniform rental service owed tax on its purchases of laundry soap and water treatment chemicals.

The taxpayer ran a commercial laundry and uniform rental service. For this service, the taxpayer delivered clean uniforms, picked up dirty ones, and cleaned them for future use. The taxpayer had to treat wastewater from the laundry operation before it could discharge the water into the city sewer system. The taxpayer purchased water treatment chemicals and laundry soap for this operation.

Missouri taxes sales of tangible personal property unless an exemption applies. There is an exemption for chemicals used in manufacturing or processing a product. The taxpayer argued that the laundry soap qualified for this exemption. There is also an exemption for machinery and equipment used to abate water pollution. The taxpayer argued that the water treatment chemicals qualified for this exemption.

The court ruled that neither of these exemptions applied. The soap was not exempt because it was not used to manufacture or process products. The laundering process merely restored the uniforms to their original state; it did not create new products. The laundry soap was therefore taxable. The water treatment chemicals were not exempt because they were not machinery or equipment. The chemicals were not permanent enough to be machinery or equipment. The chemicals were therefore taxable.

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