What is a Site?
A site is one or more immediately adjacent parcels of real property. The ownership status of the property is not relevant – a parcel can be owned, rented, or leased by the manufacturer or processor for hire. Adjacent parcels of real property separated only by a public road comprise a single “site.” The public road dividing the site is an incidental separation of what would otherwise be one site.
Temporary Manufacturing Sites
A manufacturing operation can exists where the manufacturing site is temporary and where the manufacturing equipment is mobile. For example, operations using portable saw mills or rock crushing equipment are considered "manufacturing operations" if the activity in which the person is engaged is manufacturing.
- Rock crushing equipment that deposits material onto a roadway is not used in a manufacturing operation because this is a part of the constructing activity, not a manufacturing activity.
- Likewise, a portable cement mixer at a construction site is not used in a manufacturing operation because the activity is constructing, not manufacturing.
- Other portable equipment used in non-manufacturing activities, such as continuous gutter trucks or trucks designed to deliver and combine aggregate, or specialized carpentry tools, do not qualify for the same reasons.
Multiple Manufacturing Sites
Manufacturing tangible personal property for sale can occur in stages. Each stage can take place at different manufacturing sites. For example, if a taxpayer processes pulp from wood at one site, and transfers the resulting pulp to another site that further manufactures the product into paper; two separate qualifying manufacturing operations exist if the end product is sold as tangible personal property.
At the Site or Away from the Site
Questions have been raised regarding whether, and to what extent, the M&E exemption includes a requirement that qualifying activity take place at a manufacturing site. The M&E statute provides an exemption from tax for machinery and equipment “used directly in the manufacturing operation.” The phrase “manufacturing operation” is defined as “the manufacturing of articles, substances, and commodities for sale as tangible personal property.” The M&E statute also describes the manufacturing operation in terms of a process, with a beginning and an end, taking place at a location. The statutory definition of “manufacturing operation” provides in part, “a manufacturing operation begins at the point where the raw materials enter the manufacturing site and ends at the point where the processed material leaves the manufacturing site.” The definition of “testing operation” has similar language. The definition of “research and development operation” does not have any language regarding site.