Press Room: Tax Release

October 02, 2014

Illinois Manufacturers May Be Eligible for Illinois Use Tax Refunds Based on Court’s Interpretation of Chemicals

Illinois manufacturers should consider filing refund claims if chemicals used in their manufacturing process qualify for the use tax exemption for manufacturing machinery and equipment as a result of a recent Cook County Circuit Court Case. The Court in PPG Industries, Inc. v. Illinois Department of Revenue, affirmed that chemicals that effect a direct and immediate change upon the product, but do not chemically react with the final product, qualify for Illinois’ use tax exemption for manufacturing machinery and equipment. Specifically, the Court in PPG Industries, Inc. held that nitrogen and hydrogen injected into a float bath glass-manufacturing process qualify for the exemption because the chemicals change the glass from a liquid to a solid and remove defects. It is likely the Department of Revenue will appeal the circuit court decision.

Andersen Tax can assist with evaluating whether any chemicals used in the manufacturing process qualify for the use tax exemption. Furthermore, Andersen Tax can prepare refund claims and handle the refund process with the Illinois Department of Revenue. Despite the likely appeal by the Department of Revenue, we recommend refund claims be filed in appropriate situations for all open periods.