§ 47:305.5 — Exemptions; manufacturing machinery and equipment

Louisiana § 47:305.5

• Jurisdiction: Louisiana
• Title 47: Revenue and Taxation

Text

§305.5. Exemptions; manufacturing machinery and equipment
A. For purposes of this Section, the following words shall have the following
meanings unless the context indicates otherwise:
(1)(a) "Machinery and equipment" means tangible personal property or other
property that is eligible for depreciation for federal income tax purposes and that is used as
an integral part in the manufacturing of tangible personal property for sale or the production,
processing, and storing of food and fiber or of timber. Machinery and equipment shall also
include but is not limited to the following:
(i) Computers and software that are an integral part of the machinery and equipment
used directly in the manufacturing process, or which control or communicate with computer
systems that control heating or cooling systems for machinery or equipment that
manufactures tangible personal property for sale. Computers and software used for inventory
and accounting systems or that control non-qualifying machinery and equipment are not
considered machinery and equipment for purposes of this Subparagraph.
(ii) Machinery and equipment necessary to control pollution at a plant facility where
pollution is produced by the manufacturing operation.
(iii) Machinery and equipment, including related computers and software, used to
test or measure raw materials, the property undergoing manufacturing or the finished
product, when the test or measurement is a necessary part of the manufacturing process.
(iv) Machinery and equipment used by an industrial manufacturing plant to generate
electric power for self-consumption or cogeneration.
(v) Machinery and equipment used primarily to produce a news publication whether
it is ultimately sold at retail or for resale or at no cost including but not limited to all
machinery and equipment used primarily in composing, creating, and other prepress
operations, electronic transmission of pages from prepress to press, pressroom operations,
and mailroom operations and assembly activities. The term "news publication" shall mean
any publication issued daily or regularly at average intervals not exceeding three months,
which contains reports of varied character, such as political, social, cultural, sports, moral,
religious, or subjects of general public interest, and advertising supplements and any other
printed matter ultimately distributed with or a part of the publications.
(b) Machinery and equipment shall not include any of the following:
(i) A building and its structural components, unless the building or structural
component is so closely related to the machinery and equipment that it houses or supports
that the building or structural component can be expected to be replaced when the machinery
and equipment are replaced.
(ii) Heating, ventilation, and air-conditioning systems, unless their installation is
necessary to meet the requirements of the manufacturing process, even though the system
may provide incidental comfort to employees or serve, to an insubstantial degree,
nonproduction activities.
(iii) Tangible personal property used to transport raw materials or manufactured
goods prior to the beginning of the manufacturing process or after the manufacturing process
is complete.
(iv) Tangible personal property used to store raw materials or manufactured goods
prior to the beginning of the manufacturing process or after the manufacturing process is
complete.
(2) "Manufacturer" means any of the following:
(a) A person whose principal activity is manufacturing, as defined in this Subsection,
and who is assigned by Louisiana Works a North American Industrial Classification System
code within the agricultural, forestry, fishing, and hunting Sector 11, the manufacturing
Sectors 31-33, the information Sector 511110 as they existed in 2002, or industry code
423930 as a recyclable material merchant wholesaler engaged in manufacturing activities,
which must include shredding facilities, as determined by the secretary of the Department
of Revenue.
(b) A person whose principal activity is manufacturing and who is not required to
register with Louisiana Works for purposes of unemployment insurance, but who would be
assigned a North American Industrial Classification System code within the agricultural,
forestry, fishing, and hunting Sector 11, the manufacturing Sectors 31-33, the information
Sector 511110 as they existed in 2002, as determined by the Louisiana Department of
Revenue from federal income tax data, if he were required to register with Louisiana Works
for purposes of unemployment insurance.
(3) "Manufacturing" means putting raw materials through a series of steps that brings
about a change in their composition or physical nature in order to make a new and different
item of tangible personal property that will be sold to another. Manufacturing begins at the
point at which raw materials reach the first machine or piece of equipment involved in
changing the form of the material and ends at the point at which manufacturing has altered
the material to its completed form. Placing materials into containers, packages, or wrapping
in which they are sold to the ultimate consumer is part of this manufacturing process.
Manufacturing, for purposes of this Paragraph, does not include any of the following:
(a) Repackaging or redistributing.
(b) The cooking or preparing of food products by a retailer in the regular course of
retail trade.
(c) The storage of tangible personal property.
(d) The delivery of tangible personal property to or from the plant.
(e) The delivery of tangible personal property to or from storage within the plant.
(f) Actions such as sorting, packaging, or shrink wrapping the final material for ease
of transporting and shipping.
(4) "Manufacturing for agricultural purposes" means the production, processing, and
storing of food and fiber and the production, processing, and storing of timber.
(5) "Plant facility" means a facility, at one or more locations, in which
manufacturing, referred to in Sectors 11 and 31-33 of the North American Industrial
Classification system as of 2002, of a product of tangible personal property takes place.
(6) "Used directly" means used in the actual process of manufacturing or
manufacturing for agricultural purposes.
B. The following items shall be exempt from the sales and use tax imposed by the
state or a political subdivision whose boundaries are coterminous with the state:
(1) Machinery and equipment used by a manufacturer in a plant facility
predominately and directly in the actual manufacturing for agricultural purposes or the actual
manufacturing process of an item of tangible personal property, which is for ultimate sale to
another and not for internal use, at one or more fixed locations within Louisiana.
(2) Machinery and equipment purchased by a utility regulated by the Public Service
Commission or the council of the city of New Orleans. For the purposes of this Paragraph,
the term "utility" shall mean a person regulated by the Public Service Commission or the
council of the city of New Orleans who is assigned a North American Industry Classification
System Code 22111, Electric Power Generation, as it existed in 2002 and shall be considered
a "manufacturer" for purposes of this Section.
(3) Sales of electricity for chlor-alkali manufacturing processes.
C. The following items purchased by a person whose principal activity is
manufacturing and who is assigned an industry group designation by the United States
Census of 3211 through 3222 or 113310 pursuant to the North American Industry
Classification System of 2007 shall be exempt from sales and use taxes imposed by the state
or a political subdivision whose boundaries are coterminous with the state:
(1) Tangible personal property consumed in the manufacturing process, such as
fuses, belts, felts, wires, conveyor belts, lubricants, and motor oils.
(2) Repairs and maintenance of manufacturing machinery and equipment.
D. The lease or rental of machinery and equipment used by a manufacturer in a plant
facility predominately and directly in either of the following shall be exempt from the lease
or rental tax imposed by the state or a political subdivision whose boundaries are
coterminous with the state:
(1) The actual manufacturing process of an item of tangible personal property.
(2) The actual manufacturing for agricultural purposes, including but not limited to
rubber-tired farm tractors, cane harvesters, cane loaders, cotton pickers, combines, haybalers,
attachments and sprayers, clippers, cultivators, discs, plows, and spreaders, which is for
ultimate sale to another and not for internal use, at one or more fixed locations within
Louisiana.
E. A political subdivision may by ordinance or resolution provide for the exemptions
established in this Section. The ordinance or resolution adopted or approved by the political
subdivision shall provide for the adoption of all of the definitions, exemptions, and
limitations provided for in this Section.
F.(1) No person shall be entitled to purchase, use, lease, or rent machinery or
equipment as defined herein without payment of the sales and use tax before receiving a
certificate of exemption from the secretary of the Department of Revenue certifying that he
is a manufacturer as defined herein.
(2) The manufacturer's exemption certificate granted by the Department of Revenue
shall serve as a substitute for the sales tax exemption for certain farm equipment.
G. The secretary of the Department of Revenue may promulgate rules and
regulations in accordance with the Administrative Procedure Act as are necessary to
administer the exemptions provided for in this Section.

Legislative History

Acts 2024, 3rd Ex. Sess., No. 11, §2, eff. Dec. 4, 2024.