Illinois Taxes Materials Spoiled or Damaged in Manufacturing

According to a General Information Letter from the Illinois Department of Revenue, spoiled or damaged ingredients do not qualify for the state’s manufacturing exemption. Raw materials which are spoiled or damaged in production are taxed on their cost price. Materials damaged after refinement or other manufacturing steps are taxed at the lower of their fair market value or cost price. (ST 05-0097-GIL)

Posted on April 7, 2006