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Repair or Replacement Parts Taxable in Kentucky


Manufacturing

A manufacturer claimed that screws, gaskets, couplings, fittings, and fasteners were exempt as industrial tools, machinery, or as a result of their use within a qualified enterprise zone. The Board of Appeals, however, rule in favor of the Department of Revenue, which argued that the property should be classified as “repair parts” or “replacement parts” and therefore not entitled to an exemption under any of the taxpayer’s positions. While it was undisputed that the items were purchased to repair, maintain, or monitor existing machinery and equipment, Board did not agree that these items were considered “machinery”. In addition, the Board did not agree with the claim that some of the items qualified as exempt industrial tools because they did not come into direct contact with the manufactured product. (Order No. K-19502)

(08/18/2006)
(Archived)
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