If my company anodizes, electroplates, etches, and cleans customers' metal parts but never sells any product, do I need to charge sales tax on those services, and do I owe tax on the chemicals and supplies I use to perform them?

Plain-English summary

The Missouri Department of Revenue ruled that a metal-finishing company's anodizing, electroplating, etching, and cleaning services are not subject to Missouri sales tax. The company brings in customers' metal parts from Missouri and nearby states, runs them through hot or cold acid baths, electrically charged plating tanks (adding zinc, tin, or nickel), acid-etch or bead-blast cleaning, or alkaline baths -- but it never manufactures or sells any tangible product, only services. Because Missouri sales tax under Section 144.020, RSMo, applies only to services that are specifically enumerated in that statute, and anodizing, electroplating, etching, and cleaning are not on that list, the company owes no sales tax on what it charges customers for these services.

The ruling does not stop there, though. The same company still has to pay sales or use tax on the chemicals and supplies it buys to perform those services. Missouri exempts chemicals, machinery, equipment, and materials from sales/use tax only when they are used in "manufacturing" or "processing" that transforms an item into something with a different use, identity, and value. The Department pointed to the Missouri Supreme Court's decision in Mid-America Dairymen, Inc. v. Director of Revenue for the principle that processing is a subset of manufacturing -- if an activity isn't manufacturing, it can't be processing either. Here, the company itself conceded its activities are not manufacturing, and the ruling notes that only a very thin residue (tenths to hundred-thousandths of an inch) is added to or removed from the parts. So the exemption for manufacturing/processing inputs does not apply, and the company must pay sales tax when it buys these chemicals and supplies in Missouri, or use tax when it buys them out of state without paying tax at purchase.

In short, this is a split ruling: tax-free on the labor/service side, taxable on the input side. The company had asked for this as a renewal of a prior letter ruling, stating its business activities had not changed since that earlier ruling issued.

What this means for you

Metal finishers, platers, and coating shops

If your business only performs services on customers' own metal parts -- anodizing, electroplating, etching, cleaning, or similar surface-treatment work -- and you never manufacture or sell tangible personal property, you generally do not need to collect and remit Missouri sales tax on your service charges, because these specific services are not enumerated as taxable under Section 144.020, RSMo. But don't assume that also exempts your supply costs.

Purchasing chemicals, plating solutions, and shop supplies

Expect to pay Missouri sales tax (or use tax on out-of-state purchases) on the acids, plating chemicals, and other consumables used in your process. The manufacturing/processing exemption in Section 144.054, RSMo, only applies if your activity actually transforms the item into something with a different use, identity, and value -- and a thin surface treatment that adds or removes only a fraction of an inch of material, without changing the part's fundamental identity, was found here not to qualify.

Businesses relying on an older letter ruling

This ruling was itself requested as a renewal because the taxpayer's facts hadn't changed since an earlier ruling. If your own facts, business model, or the underlying law have changed since a prior ruling you received, you cannot simply assume the old ruling still protects you -- consider requesting a new one.

Common questions

Q: Do I have to charge my customers sales tax for anodizing or plating their parts?
A: Based on this ruling, no -- as long as you are only performing services (not selling tangible personal property) and those services are anodizing, electroplating, etching, or cleaning, none of which are enumerated as taxable services under Section 144.020, RSMo.

Q: But do I owe tax on the chemicals I use to do that work?
A: Yes. The Department concluded these purchases don't qualify for the manufacturing/processing exemption in Section 144.054, RSMo, because the service provider's own activities are not "manufacturing" and, under Missouri case law, can't be "processing" either if they aren't manufacturing.

Q: Why does it matter that only a small amount of material is added or removed from the parts?
A: The ruling's facts note that residues from cleaning and electroplating are typically in the range of tenths to hundred-thousandths of an inch -- a detail supporting the conclusion that the process doesn't transform the part into something with a meaningfully different use, identity, and value, which is the legal test for "processing."

Q: Can I rely on this ruling for my own metal-finishing business?
A: No. This letter ruling is binding on the Department only with respect to the specific Applicant who requested it, only for three years from its date, and only as long as that Applicant's facts don't change and the underlying law isn't changed by the legislature or courts. Other taxpayers cannot rely on it directly, though it illustrates how the Department applies the statutes.

Q: What if my shop also manufactures or sells parts, not just services?
A: This ruling only addresses a business that provides services and sells no tangible personal property. If you also manufacture or sell products, the analysis of both the service-tax question and the manufacturing/processing exemption for your inputs could come out differently.

Citations and references

Statutes and regulations:

• Section 144.020.1(1), RSMo (imposition of sales tax on retail sales of tangible personal property and enumerated taxable services)
• Section 144.610.1, RSMo (use tax on storage, use, or consumption of tangible personal property)
• Section 144.054.2, RSMo (exemption for chemicals, machinery, equipment, and materials used in manufacturing/processing)
• Section 144.054.1(1), RSMo (definition of "processing")
• Section 144.010.1(13), RSMo (sale at retail / use for consumption, not resale)
• Section 536.021.10, RSMo (Director of Revenue's authority to issue binding letter rulings)
• 12 CSR 10-1.020 (letter ruling procedure)

Case law:

• Mid-America Dairymen, Inc. v. Director of Revenue, 924 S.W.2d 280 (Mo. banc 1996) (processing is a subset of manufacturing; citing State ex rel. Union Elec. Co. v. Goldberg, 578 S.W.2d 921 (Mo. banc 1979); Galamet, Inc. v. Director of Revenue, 915 S.W.2d 331 (Mo. banc 1996); McKinley Iron, Inc. v. Director of Revenue, 888 S.W.2d 705 (Mo. banc 1994))

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8363

Original ruling text

Dear Applicant:

This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated June 12, 2025.

The facts as presented in your letter ruling request are summarized as follows:

Applicant has received several previous letter rulings specifying what is and what is not subject to Missouri sales tax in its business operations. Applicant has applied for a renewal of the most recent letter ruling and the scope of their business activities has not changed since that ruling was issued.

Applicant is in the business of anodizing, electroplating, etching, and cleaning metal parts that are brought to Applicant by customers from Missouri and other nearby states. Applicant does not manufacture any products and does not sell any tangible personal property; it only provides services to customers. Anodizing involves bathing the metal parts in a hot or cold acid bath that carries an electrical current. Applicant also cleans metal parts by acid etching in a bath, bead blasting in a chamber, or by alkaline baths. Electroplating involves adding zinc, tin, or nickel to an electrically charged tank of liquid solution and bathing the metal parts in the solution. Little material is left on the parts after cleaning and electroplating, with residues typically measuring in the range of tenths to hundred-thousandths of an inch.

ISSUE 1 :

Should Applicant collect and remit sales tax from its customers on its services of anodizing, electroplating, etching, and cleaning of metal parts?

RESPONSE 1 :

No. Applicant should not collect and remit sales tax from its customers on its services of anodizing, electroplating, etching, and cleaning of metal parts. Section 144.020.1(1), RSMo, imposes a tax upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in the state of Missouri. Section 144.020.1, RSMo, specifically enumerates what types of services are taxable. Services that are not enumerated in Section 144.020, RSMo, are not taxable.

Applicant is in the business of providing anodizing, electroplating, etching, and cleaning services of metal parts. Anodizing, electroplating, etching and cleaning services are not enumerated as taxable services in Section 144.020, RSMo. Therefore, Applicant should not collect and remit sales tax from its customers on those services.

ISSUE 2:

Is Applicant required to pay sales tax on its purchases of chemicals and supplies used in the provision of services to its customers?

RESPONSE 2:

Yes. Applicant is required to pay sales tax on its purchases of chemicals and supplies used in the provision of services to its customers.

Section 144.020.1(1), RSMo, imposes a tax upon every sale at retail of tangible personal property in this state. Section 144.610.1, RSMo, imposes a tax upon the storage, use or consumption in this state of tangible personal property. Section 144.054.2, RSMo, exempts from state sales tax and state and local use tax:

Electrical energy and gas, whether natural, artificial, or propane, water, coal, and energy sources, chemicals, machinery, equipment, and materials used or consumed in the manufacturing, processing, compounding, mining, or producing of any product, or used or consumed in the processing of recovered materials, or used in research and development related to manufacturing, processing, compounding, mining, or producing any product.

Section 144.054.1(1), RSMo, defines "processing" as "any mode of treatment, act, or series of acts performed upon materials to transform or reduce them to a different state or thing, including treatment necessary to maintain or preserve such processing by the producer at the production facility[.]"

In Mid-America, Dairymen, Inc. v. Director of Revenue , 924 S.W.2d 280 (Mo. banc 1996), the Missouri Supreme Court discussed the term processing:

[T]he meaning of the term "processing" is ordinarily included within the meaning of the more general and inclusive term "manufacturing."  State ex rel. Union Elec. Co. v. Goldberg, 578 S.W.2d 921, 924 (Mo. banc 1979).  It is appropriate, therefore, in fully defining "processing," to draw on the terms we have used . . . in Galamet [Galamet Inc. v. Director of Revenue, 915 S.W.2d 331 (Mo. banc 1996)] to define "manufacturing."  Furthermore, in adopting these terms from Galamet, we arrive at a definition that is consistent with the earlier definitions from Goldberg and McKinley Iron [McKinley Iron, Inc. v. Director of Revenue, 888 S.W.2d 705 (Mo. banc 1994)].  It is a definition that fills in where we left off in McKinley Iron by characterizing the "end product" sought to be produced as an article with a use, identity, and value different from the use, identity, and value of the original.

Id. at 282.  In other words, as expressed by the Court in defining "processing," if the activity at issue is not manufacturing, it cannot be processing.

Section 144.020, RSMo, imposes a sales tax on sales of tangible personal property when title passes to purchasers for their use or consumption and not for resale.  Under Section 144.010.1(13), RSMo, the sales of chemicals and supplies to Applicant are subject to sales tax as Applicant uses these items in performing its services and does not resell them.  Section 144.610.1, RSMo, imposes a tax upon the storage, use or consumption in this state of tangible personal property.  Therefore, when Applicant purchases these items out of state where tax is not paid at the time of purchase, Applicant must pay consumer's use tax because it is the ultimate user of the items.

Applicant concedes that its activities are not manufacturing. Consequently its activities cannot be processing either, according to the Missouri Supreme Court in Mid-America Dairymen .  Therefore, Applicant's purchases of chemicals are not exempt under Section 144.054, RSMo.

This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals.  If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change.  For this reason, the interpretation set forth above should be reviewed on a regular basis.  Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.

Should additional information be needed, please contact Associate Counsel J. Ross Shelton, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.

Sincerely,

Trish Vincent