Machinery Used to Mix Oil Taxable in Arkansas

Thursday, December 1st, 2016

New Mexico Department of Revenue.

Arkansas recently ruled that machinery used mix oil during transportation was not exempt manufacturing machinery.

The taxpayer produced margarine, which required palm oil as part of the recipe. The taxpayer had oil delivered from a supplier. Unless the oil mixed during transportation, it separated and became unusable. The taxpayer bought machinery - a tank car agitator - to mix the oil while it was in transit.

Arkansas exempts machinery used directly in the manufacturing process. Machinery used to handle raw materials before the manufacturing process begins is not exempt.

The taxpayer claimed the agitator was exempt under the manufacturing machinery exemption. Arkansas ruled that the manufacturing process had not yet begun while the oil was in transit. As a result, the machinery was not exempt because it was only used to handle raw materials.

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