Administrative Hearing Commission

Richard Maseles, Esquire

Wastewater treatment chemicals and laundering supplies were exempt from use tax. AAA Laundry & Linen Supply Co. v. Director of Revenue, No. 11-2210 RS (Mo. A.H.C, April 18, 2013), Dandamudi, C.

AAA rented uniforms, tablecloths, towels, and other fabric items to its health care, hospitality, and industrial market customers. It picked up the items from the customers and brought them back to its laundry to clean them. The Director audited AAA and assessed use tax liability for purchases of wastewater treatment chemicals and laundering supplies from vendors outside Missouri.  AAA appealed that assessment. 

AAA did not owe use tax on purchases of the chemicals or supplies. The chemicals were exempt from taxation under § 144.030.2(15) as equipment used solely to prevent, abate, or monitor water pollution, because without the chemicals, the wastewater treating equipment would not perform its function of treating wastewater. The commission also decided that AAA was not liable for use tax on laundering supply purchases because the supplies were used in cleaning and sanitizing the clothing, which fell under the definition of “processing” in § 144.054.1. However, they were not exempt from taxation under § 144.615(6) because, while the clothes were rented, the supplies were not. Further, they were not used to create new items and were not repair parts.