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Florida Sales Tax Rules

12A-1.063 Tangible Personal Property Consumed in Manufacturing, Processing, Assembling and Refining

1.(a) The terms "retail sale", "sale at retail", "use", "storage", and "consumption" shall not include the sale, use, storage, or consumption of industrial materials, including chemicals and fuels, for future processing, manufacturing, or conversion into articles of tangible personal property for resale where such industrial materials, including chemicals and fuels, become a component part of the finished product nor shall such term include materials, containers, labels, sacks, or bags intended to be used one time only for packaging tangible personal property for sale or for packaging in the process of providing a service taxable under Chapter 212, F.S.

(b) The sale, use, storage, or consumption of tangible personal property, including machinery and equipment or parts thereof, purchased electric power, fuels (except those exempted under subsection 12A-1.059(2)(a) F.A.C.), or any other kind of energy used to power machinery, when said items are used and dissipated in fabricating, processing, or converting materials into tangible personal property for resale are taxable even though they may become ingredients or components of the tangible personal property for sale through accident, wear, tear, erosion, corrosion, or similar means. Example: Grinding balls and chains used to crush cement in a concrete manufacturing plant are taxable.

2. Sandpaper, grinding wheels, saw blades, drills, files and tools of similar types, as well as detergents used for removing grease and oil from parts, etc., are taxable.

3. Detergents, industrial chemicals and boiler compounds which are used and exhausted in caring for, cleansing and preserving the machinery and tools used in the manufacturing process are taxable.

4. Cutting oil used by machine shops in the manufacture of tangible personal property for sale is taxable.

5. Calcium carbide used for generating acetylene for sale is exempt.

6. Silicate of soda used one time only for the purpose of cleaning and reclaiming fuel oil for sale is taxable.

7. Cutters, tools, jigs, hobs, etc., even though especially designed for a particular job and not reusable except on a job of exactly the same specifications are taxable.

8. Chemicals such as calcium chloride, which are used in making brine which is used as a refrigerant are taxable.

9. Anhydrous ammonia used in the manufacture of ice does not become a component part of the finished product and is taxable.

10. Lime used in the manufacture of ice for the purpose of softening, purifying and preventing discoloration of the water used, becomes a component part of the finished product and is exempt.

11. When NoKrack pellets go into and become a part of the ice block sold for commercial purposes, they are exempt.

12. Carbon dioxide gas used to carbonate soft drinks and beer becomes a component part of the finished product and is exempt.

13. Chlorine is taxable when used in cooling systems.

14. Gases used by citrus packing houses for coloring fruit are exempt.

15. Soaps, soap powders and detergents used by packing houses, citrus concentrate plants and canneries to clean fruits and vegetables are taxable.

16. Preparations applied directly to citrus fruits in a packing house to retard the growth of mold and bacteria are taxable.

17. Polyethylene plastic bags used for drum liners and rings used to seal drums and/or storage cans by the citrus concentrate and processing industry are considered to be immediately consumed in interim processing of tangible personal property for resale and are taxable.

18. Carbofrax or checker brick used in the manufacture of artificial gas for commercial use and sale is in the nature of a part of the plant's machinery and is taxable.

19. Purchases of regulators by public utility gas companies to be attached to consumption meters, acting as a device to adjust the pressure of gas from the main to a usable consumption level for commercial appliances are taxable to the utility company. Gas meters and parts pertaining thereto are also taxable. Odorants added by public utility gas companies as a safety factor are exempt when purchased by the utility.

20. Distribution transformers and the equipment parts pertaining thereto, and meter boxes and metering equipment and parts pertaining thereto, when purchased and used by power companies are taxable.

21. The inspection fee charged and invoiced by the seller on telephone and power line poles is taxable. Such charge, when made by an independent inspector, is exempt.

22. Iron oxide shavings, fatchemco, ag-el-40, soda ash and lime and disodium phosphate are industrial materials and are used directly and are immediately dissipated in the manufacturing process and are taxable.

23. Industrial shells which consist of lead slugs with powder charges and are fired into rotary kilns to prevent the product from solidifying, as in the manufacture of defluorinated phosphate for sale are taxable.

24. Core paste or core oil used by foundries to facilitate the removal of castings from molds is taxable. 

25. Bentonite (volclay), pitch, sea-coal and parting, which are mixed with sand in making foundry molds, are considered to be immediately dissipated in manufacturing castings for sale and are taxable.

26. Molding sand and flour used in making foundry molds and cores are taxable.

27. Plumbago or similar mold release products that are applied to the face of a mold are taxable even though small traces of the material may become an ingredient of the finished product through accident, wear, tear, erosion, corrosion, adhesion, or other similar means.

28. Limestone and Purite charged into the furnace along with coke, pig iron and scrap iron to free the iron of impurities in the manufacture of castings are taxable.

29. Firebricks, fire clay and ganister used in foundry furnaces are taxable.

30. Chill-nails and chaplets, used respectively to retard shrinkage and to hold cores in place, become component parts of the finished castings and are exempt.

31. Welding rods which become a component part of tangible personal property produced for resale are exempt. Welding flux, although immediately dissipated in fabricating tangible personal property for resale, is taxable.

32. Concrete curing compounds used by concrete block manufacturers in producing tangible personal property for resale are exempt. They are taxable when used by contractors in the performance of contracts under Rule 12A-1.051, F.A.C.

33. When Icascocide and Cre-O-Tox are sold to a producer or wholesaler to be placed on lumber which is to be resold, they are exempt. When sold to a consumer to be placed on lumber for his own use, they are taxable.

34. White oil, purchased by bakeries as a dough divider or through grease to prevent the dough from adhering to mixing machinery is exempt.

35. Rough used by manufacturers for imparting a lustre to plastic eyeglass frames becomes a component part of the finished product and is exempt.

36. Commercial salt used in curing hides for resale is exempt.

37. Dynamite used as an explosive in quarrying or mining tangible personal property for sale is taxable.

38. Ink used for stamping the tax on cigarettes or in postage metering machines is taxable.

39. Rubber covers used as stencils in the process of sand blasting the faces of tombstones, although immediately dissipated, are taxable.

40. Sand used in sandblasting, even though immediately dissipated in the processing, manufacture or fabrication of tangible personal property for sale is taxable. Sand used in repairing or remodeling tangible personal property or real property is taxable to the contractor or user as an overhead cost item.

41. Fuel (except those fuels exempted under paragraph 12A-1.059(2)(a), F.A.C.), used in reconditioning open-head drums for resale by fire blasting process that burns paint and residue of prior content from the drums is taxable as an industrial material, even though it is immediately dissipated in processing tangible personal property for sale.

Rulemaking Authority 212.17(6), 212.18(2), 213.06(1) FS. Law Implemented 212.02(14)(a), (c), (15), (21), 212.05(1)(f), 212.08(7)(b) FS. History– Revised 10-7-68, Amended 1-17-71, Revised 6-16-72, Amended 12-23-80, 7-20-82, Formerly 12A-1.63, Amended 12-16-91.

  • Florida DOR
  • ABA
  • FiCPA
  • The Florida Bar

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