§ 77-2701.47 — Manufacturing machinery and equipment, defined

Nebraska § 77-2701.47

• Jurisdiction: Nebraska
• Ch. 77: Revenue and Taxation

Text

(1) Manufacturing machinery and equipment means any machinery or equipment purchased, leased, or rented by a person engaged in the business of manufacturing for use in manufacturing, including, but not limited to:
(a) Machinery or equipment for use in manufacturing to produce, fabricate, assemble, process, finish, refine, or package tangible personal property;
(b) Machinery or equipment for use in transporting, conveying, handling, or storing by the manufacturer the raw materials or components to be used in manufacturing or the products produced by the manufacturer;
(c) Molds and dies and the materials necessary to create molds and dies for use in manufacturing that determine the physical characteristics of the finished product or its packaging material, whether or not such molds or dies are permanent or temporary in nature, and including any chemicals, solutions, or catalysts utilized in the mold or die process even if such items are consumed during the course of the mold or die process;
(d) Machinery or equipment for use in manufacturing to maintain the integrity of the product or to maintain unique environmental conditions required for either the product or the machinery and equipment used in manufacturing by a manufacturer;
(e) Testing equipment for use in manufacturing to measure the quality of the finished product;
(f) Computers, software, and related peripheral equipment for use in manufacturing to guide, control, operate, or measure the manufacturing process;
(g) Machinery or equipment for use in manufacturing to produce steam, electricity, or chemical catalysts and solutions that are essential to the manufacturing process even if such produced items are consumed during the course of the manufacturing process or do not become necessary or integral parts of the finished product; and
(h) A repair or replacement part or accessory purchased for use in maintaining, repairing, or refurbishing machinery and equipment used in manufacturing.
(2) Manufacturing machinery and equipment does not include: Vehicles required to be registered for operation on the roads and highways of this state; hand tools; office equipment; and computers, software, and related peripheral equipment not used in guiding, controlling, operating, or measuring of the manufacturing process. Machinery or equipment does not need to come into direct physical contact with any of the raw materials, components, or products that are part of the manufacturing process to be considered manufacturing machinery or equipment.

Legislative History

Source: Laws 2005, LB 312, § 9; Laws 2006, LB 1189, § 4. Annotations: Any amount of use in manufacturing is sufficient to bring machinery or equipment purchased by a “person” engaged in the business of manufacturing within the definition of manufacturing machinery and equipment. Kerford Limestone Co. v. Nebraska Dept. of Rev., 287 Neb. 653, 844 N.W.2d 276 (2014). Motor grader’s use by limestone manufacturing company to maintain stockpiles of limestone separated according to gradation was an exempt use under this section, because such use maintained the integrity of the company’s product. Kerford Limestone Co. v. Nebraska Dept. of Rev., 287 Neb. 653, 844 N.W.2d 276 (2014). No time-based qualifications are imposed upon the uses that bring machinery or equipment within the meaning of the definition of manufacturing machinery and equipment. Kerford Limestone Co. v. Nebraska Dept. of Rev., 287 Neb. 653, 844 N.W.2d 276 (2014). The regulation that requires machinery and equipment to be used in manufacturing more than 50 percent of the time in order to qualify as manufacturing machinery and equipment is contrary to the plain language of this section. Kerford Limestone Co. v. Nebraska Dept. of Rev., 287 Neb. 653, 844 N.W.2d 276 (2014). Whether the statutory language “to maintain the integrity of the product” encompassed the specific act of maintaining inventory stockpile areas was a question of law. Kerford Limestone Co. v. Nebraska Dept. of Rev., 287 Neb. 653, 844 N.W.2d 276 (2014). A manufacturer was not entitled to obtain a refund of sales tax on building materials used in the construction of an ethanol production plant where the materials were purchased by an Option 3 contractor rather than by the manufacturer. Bridgeport Ethanol v. Nebraska Dept. of Rev., 284 Neb. 291, 818 N.W.2d 600 (2012). Under this section and section 77-2704.22(1), the sale of manufacturing machinery and equipment includes the sale of items that are assembled to make manufacturing machinery and equipment. Concrete Indus. v. Nebraska Dept. of Rev., 277 Neb. 897, 766 N.W.2d 103 (2009).