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Sales tax exemption for certain wineries

As of July 1, 2014, a new sales tax exemption is available for certain wineries engaged in Manufacturing and Research and Development. 

Eligibility

Wineries must meet three tests in order to qualify for the 4.1875% exemption on the purchase or lease of equipment used in Manufacturing or R&D: 

1. Derive more than 50% of their revenues from a manufacturing activity (like producing wine in a wine cellar.)

2. Purchase or lease qualified property (generally machinery and equipment used in manufacturing) or special purpose buildings if 67% of the building's volume is devoted to a qualified use listed in item 3 below.   

Not eligible are supplies, furniture, inventory, equipment used in the extraction process (harvest)* or equipment used for storage. 

3. Use of the building or property is qualified when it is used:

  • In any stage of the manufacturing process
  • To maintain or repair equipment used in those processes
  • In research and development activities. 

Documentation 

Purchasers must provide an exemption certificate to sellers in order to take advantage of the reduced sales tax rate. 

Limitations

Eligible purchases are capped at $200 million dollars in a calendar year. 

Can't combine with other exemptions

Since 2001, organizations generating more than 50% of their gross receipts from an agricultural business activity have been able to take advantage of a 5.5% sales and use tax exemption for "purchases of farm equipment and machinery, and the parts thereof, to be used primarily in producing and harvesting agricultural products." Purchases that qualify under this section are specifically excluded from the manufacturing exemption. 

*Eligible for the 5.5% exemption.