Manufacturing Sales Use Tax Exemption

A new law beginning on July 1, 2014 allows manufacturers and certain research and developers to obtain a partial exemption of sales and use tax on certain manufacturing and research and development equipment purchases. To be eligible under this law, you must meet all three of these conditions:

  • Be engaged in certain types of business, also known as a “qualified person.”
  • Purchase “qualified property.”
  • Use that qualified property for the uses allowed by this law.

 

Qualifications

The list of criteria to qualify for the manufacturing exemption can be quite complex. We suggest you take the time to determine if your business and purchases or leases qualify, click here for qualifications.

Get it in Writing

Tax and fee laws can be complex and difficult to understand. If you have specific questions about this exemption and who or what qualifies, we recommend that you get answers in writing from the California State Board of Equalization (BOE). This will enable you to get the best advice and will protect you from tax, penalties and interest in case you are given erroneous information. Requests for written advice can be emailed to the Board of Equalization (BOE) or mailed directly to:

State Board of Equalization
P.O. Box 942879
Sacramento, CA 94279

For more details, please see publication 8Get It in Writing!

If You Need Help

If at any time you need assistance feel free to contact the California State Board of Equalization. BOE staff is developing a proposed regulation for consideration by elected Board members to help businesses understand what manufacturing equipment qualifies for the sales tax exemption.

Updated 7/5/18

Payroll Masters is not a licensed insurance broker or agent, law firm or accountancy and does not provide professional or legal advice and therefore Payroll Masters assumes no responsibility for claims arising from the use or implementation of any information proffered here or verbally. This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal or financial advice. Please contact your attorney, CPA, insurance agent or financial advisor in connection with any fact-specific situation in which you intend to take significant employment action. Reader shall and does hereby indemnify, defend, and hold harmless Payroll Masters from and against any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries, and deficiencies, including without limitation interest, penalties, and reasonable attorney fees and costs, that either party may incur or suffer and that arise from, result from, or are related to this article, topics contained herein or any actions reader may have taken as a result of reading said article.