A Washington hardware provider was denied the state’s machine and equipment (M&E) sales tax exemption for their purchases of plastic injection molds used to house their hardware system. M&E exemptions state that “the retail sales tax and use tax do not apply to sales to, or use by, “a manufacturer or processor for hire of machinery and equipment used directly in a manufacturing operation.” During an audit by the state of Washington, it was discovered that the taxpayer was incorrectly not paying taxes on the purchases of the equipment used to house their hardware system. The taxpayer is not actually considered a manufacturer because they did not produce the housing units from their own materials. The taxpayer provided injection molds to a vendor that then manufactured the housing units in question. Therefore, the taxpayer is not a manufacturer with the option of M&E exemptions. (Washington Department of Revenue, Det. No. 19-0185R, 40 WTD 231, 2021)