Florida ~ Sales and Use Tax: Manufacturing Exemptions Discussed for EfW Facilities

For purposes of a Florida sales and use tax exemption for industrial machinery and equipment purchased for use at a fixed location for the manufacture, processing, compounding, or production of items of tangible personal property, an operator of energy from waste (EfW) facilities owned by municipalities did not qualify as an “eligible manufacturing business” because the operator’s business activities were identifiable under an NAICS number that was not a qualifying code for the exemption.

The operator was not excluded from another exemption for industrial machinery and equipment uses at a fixed location in the state to produce electrical or steam energy based on the operator’s holding of a permit issued by the Florida Department of Environmental Protection, although the operator would have to strictly adhere to the statutory provisions for the exemption. Municipal ownership of the facilities had no effect on application of that exemption to the operator’s business.

There was no basis for application to the operator’s business of an exemption relating to labor charges for the repair of, and parts and material used in the repair of or incorporated into, certain industrial machinery and equipment used for shipping of items of tangible personal property at a fixed location in the state because the operator’s NAICS number was outside the exemption. For purposes of that exemption, the manufacturing process began at the point that the solid waste was delivered to the scale house for inspection. Machinery and equipment used to directly sort and grade materials to be used as fuels to generate electrical energy would be exempt from tax. However, the scales used to measure the amounts of materials received and that are not integral to the manufacturing process would not qualify for the exemption. The manufacturing process ends at the point where the electricity is prepared at the first step-up point/transformer at the production facility location, which is prior to distribution to customers.

Technical Assistance Advisement, No. 17A-006, Florida Department of Revenue, February 9, 2017, ¶206-268

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