Follow-up to my extraction thread and a caution for anyone filing these.
Filed the partial exemption. Denied. Reason given was that the entity's registered NAICS code is
111998, which sits in crop production, and the manufacturing exemption is available to codes in the
31 to 33 range.
The department did not evaluate the actual process. They looked up the code on the registration and
stopped.
What makes this frustrating is that the client's extraction operation is a genuinely separate
activity that would carry its own code if it were a separate entity. The code on file describes the
cultivation business because that is what the business was when it registered in 2019.
Two takeaways for the group. Check the registered NAICS code before you build an exemption argument,
because it may end the analysis before anyone reads your predominant use study. And where a client
has two genuinely distinct activities, ask whether the structure should reflect that, which is a
question for their attorney and accountant rather than me.
Appealing. Will report back.
Filed the partial exemption. Denied. Reason given was that the entity's registered NAICS code is
111998, which sits in crop production, and the manufacturing exemption is available to codes in the
31 to 33 range.
The department did not evaluate the actual process. They looked up the code on the registration and
stopped.
What makes this frustrating is that the client's extraction operation is a genuinely separate
activity that would carry its own code if it were a separate entity. The code on file describes the
cultivation business because that is what the business was when it registered in 2019.
Two takeaways for the group. Check the registered NAICS code before you build an exemption argument,
because it may end the analysis before anyone reads your predominant use study. And where a client
has two genuinely distinct activities, ask whether the structure should reflect that, which is a
question for their attorney and accountant rather than me.
Appealing. Will report back.