Equipment used to test new formulations of architectural and industrial coating products is not subject to Missouri state sales and use tax and local use tax but is subject to local sales tax. The taxpayer performs research and development to create new formulations and improve existing formulations of its coatings. The relevant statute exempts from state sales and use tax and local use tax, but not local sales tax, sales of “machinery, equipment, and materials … used in research and development related to manufacturing, processing, compounding, mining, or producing any product.” The use of the equipment qualifies as a research or development activity related to manufacturing. Also, equipment used to test existing formulations to improve the formulations of the coating products is not subject to state sales and use tax and local use tax, but is subject to local sales tax. The improvement of the formulation of an existing product produces a new product. (Letter Ruling No. LR 7414, Missouri Department of Revenue, September 12, 2014)