Question for the group - how much attention do you pay to SIC/NAICS codes when reviewing manufacturing accounts? I have a client who does both food processing (exempt) and packaging (potentially taxable) operations. Their utility bills show different tax treatment month to month and I can't figure out the pattern. Could the classification be affecting their exemption status?
SIC Code Impact on Manufacturing Tax Exemptions
Robert - absolutely! SIC codes can definitely impact tax exemptions, especially for mixed operations. Some states have very specific rules about what percentage of electricity must be used for "manufacturing" versus other activities. If your client's mix varies month to month, that could explain the inconsistent tax treatment.
Albert's right. I've seen this with several food processing clients. The key is usually in the state's definition of "manufacturing" - some include packaging and warehousing, others don't. You might need to work with the client to document what percentage of their electricity goes to each type of operation.