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Integrated production process

To qualify for a refund, the equipment must be used by the purchaser (see Used by the purchaser on page 7) in a quali-

fying activity within an integrated production process. The integrated production process means the series of activities

that result in the production of a product to be sold ultimately at retail, including the actual production process. The

production process begins with the removal of raw materials from inventory and ends when the last process prior to

loading for shipment has been completed, and also includes research and development and design of the product.

Qualifying activities

Nonqualifying activities

Equipment and machinery used primarily (50 percent or

Equipment and machinery used in the following activi-

more of its operating time) in the following activities

ties do not qualify for the capital equipment or replace-

qualify for the capital equipment or replacement capital

ment capital equipment refund:

equipment refund:

Receiving or storing raw materials

Research, development and design to produce a

Plant security, fire prevention, first aid, and hospital

product (see page 8)

stations

Constructing, cleaning, maintaining, and repairing

Pollution control, prevention, or abatement

equipment, tools, or repair parts for equipment

Plant cleaning, disposal of scrap and waste, plant

used in a qualifying activity

communications, space heating, lighting, or safety

Removal of raw materials from stock to begin the

Support operations or administrative activities used

actual production activities

to maintain the integrated production process in-

Production activities to produce the product. This

cluding management, direction, and overseeing of a

includes machinery and equipment that operate,

business, for example:

control, or regulate production equipment

•

Cleaning, repair, or maintenance of the plant fa-

Outside fabrication labor services contracted for by

cilities

a manufacturer if those services are essential to the

•

General janitorial activities

production of the product

•

Inventory management

Maintaining conditions such as temperature, hu-

•

Warehousing

midity, light, or air pressure when those conditions

•

are essential to and a special requirement of the

Internal product and production tracking

production process. This includes maintaining

•

Sales and distribution activities

finished goods inventory by the producer, but does

•

Construction, maintenance, or alteration of real

not include general space heating and lighting.

property, unless such items are foundations for

qualifying equipment or are for special purpose

Storing work-in-process, but not including storing

raw materials either in inventory or on the produc-

buildings, as defined later in this fact sheet

tion floor

•

Providing a safe work environment for employees

•

General office administration including clerical,

Quality control and testing activities done on the

personnel, and accounting activities

product

•

Customer service activities, including repairs

Packaging of the completed product. This includes all

•

Managerial functions such as business and pro-

packaging done before loading the completed product

duction analysis and supervision

for shipping, but does not include returnable items

such as pallets used in shipping. Equipment used in

activities such as addressing, applying postage, in-

voicing, etc., does not qualify as capital equipment.

Capital Equipment, Replacement Capital Equipment Sales Tax Fact Sheet 103 - Minnesota Department Of Revenue Page 3

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