Sales/Use/Indirect:
Kentucky Supreme Court Overturns Appellate Court to Hold that Manufacturer Purchased Exempt Supplies
Case No. 2021-SC-0300-DG, Ky. (12/15/22). The Kentucky Supreme Court (Court) overturned the Kentucky Court of Appeals and Franklin Circuit Court to hold that certain tangible personal property at issue purchased by an aluminum manufacturer constituted sales and use tax-exempt supplies consumed within its manufacturing process rather than taxable repair, replacement, or spare parts. In doing so, the Court considered the facts and reasoned that the items at issue (e.g., anode stubs, inductotherm lining, thermocouples and tube assemblies, and welding wire and industrial gases) had a useful life of less than one year, qualifying them as exempt items that the manufacturer “inevitably, regularly, and/or frequently buys to maintain the manufacturing process,” rather than taxable items that maintain, restore, mend or repair solid machinery or equipment “of a long-term or permanent nature and which does not necessarily have a known, limited useful life.” A concurring opinion follows. Please contact us with any questions.
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