Were short-lived vacuum cleaners used to remove oil and metal chips from manufacturing machinery exempt production equipment?

Plain-English summary

The manufacturer used vacuum cleaners to drain oil and metal chips from lathes and other machinery. The vacuums had useful lives of less than six months.

Rule 3.300 allowed an exemption for machinery entirely consumed or valueless within six months only when used in the actual manufacturing process. The Comptroller said these vacuum cleaners were not used in that process and were taxable.

Common questions

Did a useful life under six months create the exemption? Not by itself.

Why were the vacuums taxable? They cleaned manufacturing machinery but were not used in the actual manufacturing process.

What did the exemption require? Both rapid consumption or loss of value and qualifying use in actual manufacturing.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8811L0937E13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

November 14, 1988

Dear *****:

Thank you for your recent letter concerning the taxability of vacuum
clean-
ers used in your manufacturing plant.

The vacuum cleaners are used to drain oil and metal chips from lathes and
other machinery and have a useful life of less than six months.

Section 7(a) of Rule 3.300 Manufacturing; Custom Manufacturing;
Fabricating;
Processing; (enclosed) states that machinery which is entirely consumed
or
without value within six months from the purchase date is exempt. In
order
to qualify for this exemption the machinery must be used in the actual
manu-
facturing process. The vacuum cleaners are not used in the actual
manufactur-
ing process and are taxable.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call our toll-
free number 1-800-2542-5555. The regular number is 512/463-4600. You
may
write me at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Julie Pesl
Tax Correspondence