October 14, 2009
Washington’s Taxation of Manufacturing — Part 3: Special Issues Relating to the Manufacturing Machinery and Equipment Exemption
In the second part of this series, we provided an overview of the sales and use tax exemptions for manufacturing machinery and equipment used directly in a manufacturing or research and development operation under RCW 82.08.02565 and 82.12.02565 (the “M&E” exemption). See Washington’s Taxation of Manufacturing — Part 2: The Sales and Use Tax Exemption for Manufacturing Machinery and Equipment. In general, the M&E exemption applies the purchase and use by a manufacturer or processor for hire of machinery and equipment that is “used directly” in a qualifying “manufacturing operation” or “research and development operation,” as well as machinery and equipment used in “testing” for a manufacturer or processor for hire.