Tennessee Court Rules Sales Tax Exemption for Manufacturing Does Not Require New Product

• A Tennessee court ruled in favor of a taxpayer’s sales tax exemption claim for manufacturing machinery and equipment used in processing their products.
• The court ruled that the exemption does not require the production of a new or substantially different product.
• Other states may have different definitions of “manufacturing” or “processing” that require a new or substantially different product.
• The case involved a taxpayer that leases textiles and sanitizes them before leasing them to customers.
• The Tennessee Department of Revenue initially granted an exemption but later revoked it.
• The court focused on whether the taxpayer’s operations should be considered “processing.”
• The court looked to other jurisdictions for guidance on the definition of processing.
• The court ruled that the taxpayer’s sanitation operations meet the definition of processing.
• The Department argued that the process does not result in a new or substantially different product.
• The court disagreed and stated that the end-product must be in a different state or form from its original state.

Source: aprio.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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