Manufacturing and Research & Development Equipment Exemption

Overview

Beginning on July 1, 2014, manufacturers and certain research and developers may qualify for a partial exemption of sales and use tax on certain manufacturing and research and development equipment purchases and leases. To be eligible for this partial exemption, you must meet all three of these conditions:

  • Be engaged in certain types of business, also known as a “qualified person.”
  • Purchase “qualified property.”
  • Use that qualified property for the uses allowed by this law.
Manufacturing

Get it in Writing

Our tax and fee laws can be complex and difficult to understand. If you have specific questions about this exemption and who or what qualifies, we recommend that you get answers in writing from us. This will enable us to give you the best advice and will protect you from tax, penalties and interest in case we give you erroneous information.

Requests for written advice can be emailed to the Board of Equalization (BOE) or mailed directly to the BOE field office nearest you.

For more details, please see publication 8, Get It in Writing!


Manufacturing

If You Need Help

If at any time you need assistance with topics included in this guide – or with topics we may have not included – feel free to contact us.

If you have suggestions for improving this guide, please contact us via email.

Qualifications

The list of criteria to qualify for the manufacturing exemption can be quite complex. We suggest you take the time to determine if your business and purchases or leases qualify.

Qualified person

A "qualified person" means a person who is primarily engaged (50 percent or more of the time) in those lines of business described in the North American Industry Classification System (NAICS) Codes 311100 to 339999, inclusive, 541711, or 541712 published by the United States Office of Management and Budget (OMB), 2012 edition. (See Understanding Your NAICS code on Industry Topics tab)

These industries generally include those primarily engaged in the business of all forms of manufacturing, research and development in biotechnology, and research and development in the physical, engineering, and life sciences.

A qualified person may be “primarily engaged” either as a legal entity or as an establishment within a legal entity.

To be primarily engaged as a legal entity or as an establishment you must, in the prior financial year, either derive 50 percent or more of gross revenue (including inter-company charges) from, or expend 50 percent or more of operating expenses in a qualifying line of business. For purposes of research and development activities, revenues could be derived from, but are not limited to, selling research and development services or licensing intellectual property resulting from research and development activities. (See Research & Development on Industry Topics tab)

Alternatively, an establishment is primarily engaged if, in the prior financial year, it allocates, assigns or derives 50 percent or more of either of the following to a qualifying line of business: (1) employee salaries and wages, (2) value of production, or (3) number of employees based on a full-time equivalency.

In cases where the purchaser was not primarily engaged in qualifying manufacturing or research and development activities for the preceding financial year, the one year period following the date of purchase of the property may be used.

“Qualified person” does not include:

  • An apportioning trade or business that is required to apportion its business income pursuant to subdivision (b) of RTC section 25128.
  • A trade or business conducted wholly within this state that would be required to apportion its business income pursuant to subdivision (b) of RTC section 25128 if it were subject to apportionment pursuant to RTC section 25101.

In general, these apportioning trades or businesses derive more than 50 percent of their gross business receipts from an agricultural business activity, an extractive business activity, a savings and loan activity, or a banking or financial business activity as defined in subdivision (d) of RTC section 25128.

Qualified Tangible Personal Property

"Qualified tangible personal property" includes, but is not limited to:

  • Machinery and equipment, including component parts and contrivances such as belts, shafts, moving parts, and operating structures.
  • Equipment or devices used or required to operate, control, regulate, or maintain the machinery, including, but not limited to, computers, data-processing equipment, and computer software, together with all repair and replacement parts with a useful life of one or more years, whether purchased separately or in conjunction with a complete machine and regardless of whether the machine or component parts are assembled by the qualified person or another party. (See Useful Life on Industry Topics tab)
  • Tangible personal property used in pollution control that meets standards established by this state or any local or regional governmental agency within this state. (See Pollution Control on Industry Topics tab)
  • Special purpose buildings and foundations used as an integral part of the manufacturing, processing, refining, fabricating, or recycling process, or that constitute a research or storage facility used during those processes. Buildings used solely for warehousing purposes after completion of those processes are not included. (See Special Purpose Buildings on Industry Topics tab)

"Qualified tangible personal property" does not include:

  • Consumables with a useful life of less than one year.
  • Furniture, inventory, and equipment used in the extraction process, or equipment used to store finished products that have completed the manufacturing, processing, refining, fabricating, or recycling process.
  • Tangible personal property used primarily in administration, general management, or marketing.

Leases of qualified personal property may also qualify for the partial exemption. If the lease qualifies, any payments that are due and paid in the eligible period, July 1, 2014 through June 30, 2022, qualify for the partial exemption regardless of the lease inception date. (See Leases on Industry Topic tab)

Qualified Uses

The tangible personal property must be used primarily (more than 50% of the time) in one of the following manners:

  • Any stage of the manufacturing, processing, refining, fabricating, or recycling process
  • Research and development
  • To maintain, repair, measure, or test any qualified tangible personal property described by the above, or
  • For use by a contractor purchasing that property for use in the performance of a construction contract for a qualified person, provided that the qualified person will use the resulting improvement to real property as an integral part of the manufacturing, processing, refining, fabricating, or recycling process or as a research or storage facility for use in connection with those processes. (See Construction Contractor on Industry Topics tab)

For purposes of this exemption, the manufacturing process begins from the point you receive raw materials and introduce them into the manufacturing, processing, refining, fabricating, or recycling activity of the qualified person and ending at the point at which the activity has altered the product to its completed form, including packaging, if required.

The law provides that operational equipment (i.e. computers, tablets, printers, servers) used to run the manufacturing equipment are eligible for the exemption under this program provided they are used for qualifying activities. Even though your primary NAICS code is eligible for the exemption, purchases made for other activities of your operations (i.e. distribution, sales) are not eligible for the exemption.

Sellers

The partial exemption rate applies to the sale, purchase, and lease of qualified tangible personal property on or after July 1, 2014 and before July 1, 2022. A sale occurs at the time title or possession of the property transfers to the buyer regardless of when a purchase order is issued or payment is made (unless the terms of the sale expressly provide otherwise).

Partial exemption rate

The partial exemption rate is currently 4.1875 percent. The partial exemption provides that sales of the qualifying property sold to a qualified person be taxed at a rate of 3.3125 percent (7.50 percent current statewide tax rate – 4.1875 percent partial exemption) plus any applicable district taxes. You can lookup tax rates by city, county, or address.

Required Documentation

In order to document the partially exempt sale, you need to obtain a timely exemption certificate from your customer.

There are two sample certificates available on our website for your use in documenting the partial exemption.

Any document may be regarded as a partial exemption certificate as long as it contains the following:

  • the signature of the purchaser, the purchaser's agent, or the purchaser's employee;
  • the name address, and telephone number of the purchaser;
  • the purchaser's seller's permit number, or if the purchaser is not required to hold a seller's permit, a notation to that effect and the reason;
  • A statement that the property purchased is:
    • to be used primarily for a qualifying activity, or
    • for use by a contractor performing a construction contract for a qualified person
  • A statement that the purchaser is:
    • a qualified person primarily engaged in manufacturing or research and development in biotechnology or physical, engineering, and life sciences, or
    • a contractor performing a construction contract for a qualified person.
  • A statement that the property purchased is qualified tangible personal property
  • A description of the property purchased
  • The date of execution of the document

Certificates are considered timely if they are taken any time before the seller bills the purchaser for the property, any time within the seller’s normal billing or payment cycle, or at any time at or prior to delivery of the property to the purchaser.

When you take a timely partial exemption certificate in the proper form and in good faith, the partial exemption certificate relieves you from the liability for the sales tax or the duty of collecting the use tax subject to the exemption.

Invoices with claimed exempt sales should specify the name(s) of the purchasers in order to relate them to exemption certificates. It is highly recommended that you examine your certificates on a regular basis and keep the purchasers information up-to-date.

Exemption certificates received from qualified persons must be maintained for a period of not less than four years form the date on which you claim the partial exemption.

Purchasers

There is no need to apply to the BOE for the exemption. When you make qualifying purchases or leases, you must provide the seller with a timely partial exemption certificate to obtain the reduced tax rate.

Partial Exemption Certificate

There are two sample certificates available on our website for the exemption.

You may provide the certificate for each purchase, or you may issue blanket certificates.

If you issue a blanket certificate, you must advise the retailer on the purchase order, sales agreement, etc. regarding any purchases that are not subject to the partial exemption.

Any document may be regarded as a partial exemption certificate as long as it contains the following:

  • The signature of the purchaser, the purchaser's agent, or the purchaser's employee;
  • The name, address, and telephone number of the purchaser;
  • The purchaser's seller's permit number, or if the purchaser is not required to hold a seller's permit, a notation to that effect and the reason;
  • A statement that the property purchased is:
    • to be used primarily for a qualifying activity , or
    • for use by a contractor performing a construction contract for a qualified person.
  • A statement that the purchaser is:
    • a qualified person primarily engaged in manufacturing or research and development in biotechnology or physical, engineering, and life sciences, or
    • a contractor performing a construction contract for a qualified person.
  • A statement that the property purchased is qualified tangible personal property
  • A description of the property purchased
  • The date of the execution of the document.

Exemption Limitations

The law provides that a single taxpayer or combined reporting unit cannot exceed $200 million in purchases subject to the partial exemption in a calendar year.

For purposes of the exemption, “calendar year” includes the period July 1, 2014 to December 31, 2014 as well as the period January 1, 2022 to June 30, 2022. There is no proration of the $200 million limit during these periods.

There is also no proration when you are a qualified person for only a portion of the year. For example, you begin business operations on October 1, 2015. You may still claim up to the $200 million annual cap for the year 2015.

You may not carry over any unused amount to a following year. Each year you are limited to the total maximum of $200 million in purchases.

You are responsible for tracking the amount of purchases you make per calendar year. If your purchases exceed the $200 million annual cap, you will be held liable for the full sales tax amount on the purchases exceeding the limit.

If, at the time of purchase, you do not know whether you will meet the qualifications, but anticipate you will meet the qualifications in the one year period following the date of purchase, you may issue a partial exemption certificate. If, however, you do not fulfill the requirements within that one year period, you will be liable for the difference to equal the full payment of sales or use tax, with applicable interest as if you were a retailer making the sale at the date of purchase.

If you pay the full amount of sales tax at the time of purchase, and later discover that you have met all of the qualifications, you may issue a partial exemption certificate along with supporting documentation to your retailer. The retailer may then file a claim for refund for the overpaid portion of sales and use tax on your behalf. If the transaction was subject to use tax, the purchaser may file a claim directly with the BOE.

Manufacturing Exemption vs. California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA)

The table below highlights the differences between the manufacturing exemption and CAEATFA

  Manufacturer's Partial Exemption SB1128/SB71 CAEATFA Sales and Use Tax Exclusion
Eligible Participants All manufacturers described in NAICS codes 311100 to 339900, 541711, or 541712 Companies that design, manufacture, produce or assemble advanced transportation technologies or alternative source products, components or systems
Exempt Tax Rate State portion only, currently at 4.1875 percent Full rate including local and district taxes
Application requirements None Participants must apply with CAEATFA and be approved for a "project" for the exclusion to apply. The property purchased must be included approved "project."
Fee requirements None Applicants are subject to an application and administration fee

If you are accepted into the CAEATFA program, you may also take advantage of the manufacturer's exemption where appropriate. Generally the CAEATFA sales and use tax exclusion will take precedence over the manufacturer's exemption for property that is considered a "project" under the CAEATFA program. This is to your benefit since you will obtain the exclusion for the full sales and use tax rate.

You may not provide an exemption certificate for both the CAEATFA exclusion and the manufacturer's exemption for the same property. If you purchase property that is not considered part of a "project" under the CAEATFA program, but still qualifies for the manufacturer's exemption, you may provide an exemption certificate for the partial exemption.

Please click here for more information on the CAEATFA program.

Where can I find more information?

We also offer resources for you to view other proposed rules and regulations.

Industry Topics

Standard Transaction

You are a manufacturer of wooden furniture in California. You plan to expand your operations to meet the growing demands of your customers. As a result, you need to purchase new manufacturing equipment that includes a table saw, a drill press, and a lathe. You want to know if your purchases will qualify for the Manufacturing and Research & Development exemption when purchasing this new equipment.

First, you need to find out whether your company qualifies for the partial exemption. You have been in business for several years as a manufacturer of wooden furniture. You determine your company's North American Industry Classification System (NAICS) code to be 337122. Since this NAICS code falls within the range of 311100 to 339999, you determine that your company does qualify for the partial exemption.

Next, you examine whether the equipment you are purchasing qualifies for the partial exemption. You are purchasing machinery and equipment that has a useful life greater than one year. You plan to use the equipment at least 50% of the time for manufacturing purposes. Therefore, you have determined that your purchases qualify for the partial exemption.

Now that you have determined that both your business and purchases qualify for the partial exemption, you are ready to start buying equipment. You will need to download the Partial Exemption Certificate for Manufacturing and Research and Development Equipment. Fill it out, print it, and sign it. Then give it to the retailer of the equipment at the time you make your purchase.

The retailer will charge you a reduced sales tax rate thereby saving you 4.1875% in sales tax on the purchase of your equipment.

Understanding your NAICS code

In order to be considered a qualified person for the partial exemption, your business's North American Industry Classification System (NAICS) code must begin with any code from 311100 to 339999 for manufacturers, or it must be 541711 or 541712 if you are engaged in research and development.

NAICS codes are used to classify business establishments by a six-digit code system. The first four digits represent the industry group, and the last two digits represent the specific industry. For example, a business that manufactures cardboard boxes will have a NAICS code of 322211:

  • The first four digits (3222) represents Converted Paper Product Manufacturing
  • The last two digits (11) represents Corrugated and Solid Fiber Box Manufacturing

Your business' NAICS code is that which best describes your business activities, based on either its primary revenues or primary operating expenses. If there is no six digit NAICS code for your specific business activity, you may still qualify for the partial exemption if your business activities are reasonably described in a qualifying four digit industry group.

Most business or entities will have one NAICS code that best describes their overall business activities. However, if your entity's NAICS code does not qualify for the exemption and you operate separate establishments within the entity, such as a “cost center” or an “economic unit,” the separate establishment may qualify for the partial exemption if the business activities of the establishment are best described by a qualifying NAICS code. You must keep separate books and records for each establishment.

Example
You manufacture lawn and garden tractors and have two locations; one in Modesto, which is the manufacturing plant, and the other in Stockton, which is the distribution center where sales are made. Because you maintain separate books and records for each location, your manufacturing plant and distribution center are considered separate establishments.

Although there is no sales revenue from the Modesto location, since more than 50% of the operating expenses are related to manufacturing, the business activities of the Modesto location are best described by NAICS code 333112 Lawn and Garden Tractor and Home Lawn and Garden Equipment Manufacturing. The Modesto location is a “qualifying person” even if the company overall is better described by a NAICS code other than 311100 to 339999.

At the Stockton location, some additional assembly is done before the tractors are shipped to retail stores. More than 50% of the revenue from this location is from wholesale tractor sales. The operating expenses related to the assembly of the tractors represent a small percentage of the total expenses at the Stockton location. The Stockton location’s business activities are best described by the NAICS code 423820 Tractors, farm and garden, merchant wholesaler. Therefore, the Stockton location is not a qualifying person because the primary activities of the establishment do not qualify.

For more information including frequently asked questions on NAICS codes please visit www.naics.com.

Useful Life

Qualified tangible personal property must have an expected useful life of one or more years.  

For purposes of the partial exemption, property that is capitalized and depreciated on your income tax returns, or claimed as an IRC Section 179 deduction, will be regarded as having a useful life of one or more years.

If property is not capitalized and depreciated for income tax purposes, it will be presumed that the property does not have a useful life of one or more years and will not qualify for the partial exemption. 

Examples of property that do not have a useful life greater than one year:

  • Items that are expensed in a single tax year.
  • Property placed in service and disposed of in the same year.
  • Supply items.
  • Items that are not expected to have a useful life of one year, even if those items last beyond one year.
  • Items that are replaced on a regular basis of less than one year.

Research & Development

Establishments that are primarily engaged (more than 50% of the time) in research and development activities in biotechnology, physical engineering, and life sciences may qualify for the partial exemption. To qualify for the exemption, the establishment must be classified under one of the following two North American Industry Classification System (NAICS) codes:

541711 Research and Development in Biotechnology
541712 Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Qualifying research and development activities may be defined as:

  • Those activities described in Section 174 of the Internal Revenue Code.
  • For the purpose of discovering information that is technological in nature.
  • To discover useful information for new or improved business components.

In general, there are two types of business components in which a taxpayer can claim that it was engaged in qualified research and development:

  1. Product development, and
  2. Process improvement.

If you are primarily engaged in research and development as described above, your purchase or lease of machinery, equipment, or other devices that have a useful life of one or more years, and which will be used primarily for research and development will generally qualify for the partial exemption.

Example
A University has a research and development department. Research and development is not the primary activity of the University. Therefore, the University's overall activities are not best described by a qualifying NAICS code. However, if the University can establish that the research and development department is a separate “establishment,” then the research and development department may qualify for the partial exemption. To be considered a separate establishment, the University must keep separate books and records for the research and development department.

Leases

You are a new company that manufactures breakfast cereal and you are planning to acquire a new oven for manufacturing. You have decided to lease the oven instead of purchasing it and you want to know if your lease of the oven qualifies for the partial Manufacturing and Research & Development exemption.

For your company and oven lease, you:

  • Determine that your North American Industry Classification System (NAICS) code is 311230.
  • Will lease the oven for more than one year.
  • Will use the oven more than 50% of the time for manufacturing purposes.
  • Expect that more than 50% of your revenue will be from manufacturing during the entire time you lease the oven. 

Your lease of the oven qualifies for the partial exemption. When you enter into the lease agreement, you can provide the leasing company a Partial Exemption Certificate for Manufacturing and Research and Development Equipment to obtain the partial exemption from sales and use tax on the lease payments.

During your lease agreement, the leasing company will charge you a monthly lease payment, with tax separately added. However, the Manufacturing and Research & Development exemption is only in effect until June 30, 2022. Any lease payments due and paid after June 30, 2022 will be subject to the full sales and use tax rate even if the lease began during the exemption period.

Construction Contractor

You are a construction contractor hired by a manufacturer to build the steel framework for a special purpose building. The manufacturer and special purpose building meet the qualifications for the Manufacturing and Research & Development exemption. As the construction contractor, or subcontractor who contracts directly with the qualified person, you are eligible to use the partial exemption to purchase your materials, fixtures, machinery, and equipment that become part of the special purpose building.

Construction contractors generally must pay the full rate of tax on purchases of materials, fixtures, machinery, and equipment they install. However, since you are performing a construction contract for a manufacturer who qualifies for the Manufacturing and Research & Development exemption, the partial rate will apply to your purchases of materials, fixtures, machinery, and equipment.

In order to receive the partial exemption, you must provide a copy of the Construction Contractors-Partial Exemption Certificate for Manufacturing, Research and Development Equipment to the retailers of the materials, fixtures, machinery and equipment at the time you make your purchases.

In addition, you should obtain a completed Partial Exemption Certificate for Manufacturing, Research and Development Equipment from the manufacturer and keep the certificate as part of your records.

Subcontractors

Only contractors that contract directly with the qualified person may be eligible to make purchases under the partial exemption. A general contractor cannot "pass down" the partial exemption to the subcontractor by providing the subcontractor with the qualified person's partial exemption certificate, BOE-230-M. Nor can the subcontractor accept a partial exemption certificate directly from the qualified person, unless they are in contract directly with the qualified person.

The following two examples illustrate when a subcontractor may or may not utilize the partial exemption.

A manufacturer hired a general contractor to construct a special purpose building. The general contractor subcontracted with you to install the concrete foundation of the building. At that time, you also entered into a contract directly with the manufacturer to install the concrete foundation. Provided the qualified person provides you with an exemption certificate (BOE-230-M), you may take advantage of the partial exemption when purchasing the concrete and other materials that you will furnish and install as part of your construction of the concrete foundation. You should issue an exemption certificate (BOE-230-MC) to your materials supplier so you are only charged the partial tax rate.

For another job, a manufacturer hired a general contractor to construct a special purpose building. The general contractor subcontracted with you to install the steel framework of the building. However, your contact was only with the general contractor and you did not enter into a contract directly with the manufacturer. Since you did not contract directly with the qualified person, you are unable to take advantage of the partial exemption. Therefore, you cannot accept a partial exemption certificate (BOE-230-M) issued by the manufacturer or general contractor and you cannot issue an exemption certificate to your materials supplier to make partially exempt purchases.

Special Purpose Buildings

If you construct a new special purpose building or modify an existing building that is used for manufacturing or research and development, your purchases of materials, fixtures, machinery, and equipment that become part of the building may qualify for the partial exemption.

The special purpose building must be used for manufacturing, processing, refining, fabricating, or recycling processes, or it may be used as a research or storage facility for these processes. Buildings such as warehouses, used solely to store product after it has completed the manufacturing process, are not eligible for the partial exemption.

For the entire building to qualify, no more than one-third of the usable volume of the building can be used for nonmanufacturing or other non-qualifying uses. However, in those instances when the entire building does not qualify, the portion of the building that is used for manufacturing or other qualifying use may qualify for the partial exemption.

For example, a semiconductor manufacturer is constructing a building for manufacturing microchips. The building is designed and constructed with certain requirements to control temperature, humidity, and contaminants that are necessary for microchip production. Materials, fixtures, machinery and equipment purchased for and becoming part of this special purpose building are eligible for the partial exemption.

Solar Power Equipment

If you are a qualified person, your purchase of solar panels and solar power equipment used to primarily run your manufacturing equipment may qualify for the partial exemption.

There are three ways that your solar power equipment may qualify for the partial exemption:

Directly wired

If your solar power equipment is directly connected to qualifying manufacturing equipment to power the qualifying manufacturing equipment, your purchases of solar power equipment will qualify for the partial exemption.

Wired to a Power Grid

If your solar power equipment is tied to the local power grid and is not directly attached to qualifying manufacturing equipment your solar power equipment may still qualify if it is designed to generate power primarily for your manufacturing equipment. The solar equipment is deemed to generate power primarily for the qualifying manufacturing equipment if the solar power equipment is designed to generate at least 50 percent of the power used by the qualifying manufacturing equipment.

To determine whether solar power equipment is used at least 50 percent in manufacturing, divide the total annual amount of power consumed by qualifying manufacturing equipment by the total annual amount of power generated by the solar equipment. Please note the power generated by the solar equipment when the facility is not operating is regarded as power that is effectively "banked" in the local power grid such that the calculation is not limited to those periods when the facility is operating.

For example, your:

  • Qualifying manufacturing equipment consumes 600 kilowatts of electricity per year, and
  • Your solar equipment produces 1000 kilowatts of electricity per year.

Your solar power equipment is used 60 percent in manufacturing, (600/1000 = .60, or 60 percent). Therefore the solar power equipment is used at least 50 percent in manufacturing and is eligible for the partial exemption.

Fixtures on a Special Purpose Building

If your solar power equipment is purchased as part of the construction of a qualifying special purpose building, then your solar equipment will qualify for the partial exemption regardless of the percentage of generated power that is used to power manufacturing equipment.

Pollution Control

Property purchased for the use in pollution control may qualify for the partial exemption.

If you are a manufacturer and you install equipment used to reduce or remove pollution, your purchases of this equipment may qualify for the partial exemption. The pollution control equipment must meet or exceed state or local government standards at the time it is purchased.

For example, you are in the printing industry. Your business's primary activity falls within one of the qualifying NAICS codes. You purchase a carbon absorber or catalytic reactor used to control pollution that meets or exceeds state or local government standards. Your purchase will generally qualify for the partial exemption.

Repair Parts

Your purchase of repair or replacement parts may qualify for the partial exemption.

If you are purchasing parts that will be used to repair manufacturing or research and development equipment, you may take advantage of the partial exemption. However, the repair or placement parts must have a useful life of more than one year. Tools and other supply items are not considered repair or replacement parts and do not qualify for the partial exemption.

For example, you need to replace a motherboard in computer that controls a certain piece of manufacturing equipment. As long as the motherboard has a useful life of more than one year you may purchase the replacement motherboard at the partially exempt tax rate.

To take advantage of partial exemption you must download the Partial Exemption Certificate for Manufacturing and Research and Development Equipment. Fill it out, print it, and sign it. Then provide it to the retailer at the time you make your purchase.

Cement Trucks

Your purchase of a concrete or cement mixing truck may qualify for the partial manufacturing exemption.

If you are primarily engaged in truck-mixed concrete manufacturing and will use the mixing truck primarily for this purpose, your purchase of a concrete or cement mixing truck may qualify for the partial exemption.

You are considered engaged in truck-mixed concrete manufacturing if your business activities are most accurately described by a qualifying NAICS code (see NAICS code 327320); your NAICS code is that which best describes your business activities, based on either your primary revenues or primary operating expenses. Please note a construction contractor who owns a cement mixing truck would not generally qualify under a qualifying NAICS code.

Concrete or cement mixing trucks are considered Mobile Transportation Equipment for sales and use tax purposes. Leases of Mobile Transportation Equipment do not typically qualify for the partial exemption. Therefore if you are a lessee of concrete or cement trucks, your lease will generally not qualify. For more information on leases of Mobile Transportation Equipment, please see Regulation 1661, Leases of Mobile Transportation Equipment.