Ohio State Tax Blog

Current developments, commentary and helpful resources regarding Ohio state and multistate taxes from attorneys Steven A. Dimengo and Richard Fry. We concentrate on all aspects of Ohio state taxation, including sales/use tax, income tax and commercial activity tax, from audits to appeals before the Ohio Board of Tax Appeals and Ohio Supreme Court, and have significant experience in multistate tax planning. Contact us.

Home Archives Ohio Sales Tax Maximizing the Manufacturing Exemption from Ohio Sales/Use Tax: Part 2 – When is a Product “Complete”?
Maximizing the Manufacturing Exemption from Ohio Sales/Use Tax: Part 2 – When is a Product “Complete”? PDF Print E-mail
Tuesday, 30 November 2010 21:49

As described in Part 1 of this article, the scope of the manufacturing exemption from Ohio sales and use tax is determined by the beginning and end of the “manufacturing operation.” A product being manufactured is complete, thereby ending the manufacturing process, when all the processes that alter the product’s state or form or enhance its value are finished. A "manufacturing operation", however, does not include packaging or quality testing performed after the product is complete.

Ohio Administrative Code Section 5703-9-21 provides several helpful examples illustrating when the manufacturing operation ends. Particularly instructive is one involving an ice cream manufacturer, which explains that ice cream is not complete until it is cooled and hardened in a specialized freezer – the hardening room. However, the freezer after the hardening room that stores the ice cream while awaiting distribution is not entitled to the exemption because it merely maintains, but does not change or alter, the product's state and form as received by the consumer. 

Nonetheless, any change in the state or form of a product, no matter how small, will continue the manufacturing operation. In a recent Ohio Board of Tax Appeals decision addressing when pet food is complete, one of the final steps of production was sending the pet food through a screening process which removed small burrs, smoothed rough edges and removed abnormally shaped kibbles. Since this screening process changed the product’s form, “albeit ever so slightly”, and enhanced its value, the screening equipment was exempt from Ohio sales and use tax. However, if the screening process would have only filtered out the kibbles that were too large or too small, without also smoothing them, the exemption likely would not have been available.

If you need help determining when the product you manufacture is considered “complete” for Ohio sales and use tax purposes, and therefore when your manufacting operation ends, please feel free to contact us.

Last Updated on Tuesday, 30 November 2010 22:24



Ohio State Tax Attorney, Steven A. Dimengo

Steve Dimengo is recognized as one of the leading tax attorneys in Ohio, where he has been serving clients for over twenty-five years. Full Profile. Cases. Email.


Ohio State Tax Attorney, Richard B. Fry III

Richard Fry is an Associate focusing on business law, specifically taxation. He holds a J.D. and Masters of Taxation from the University of Akron. Full Profile. Email.



Steve will be speaking at the Lorman Sales and Use Tax in Ohio Seminar to be held in Akron on January 21, 2014.  He will be discussing Manufacturing Exemptions, Transfer of Business and Personal Liability for Sales tax.  Click here to see more (and register).



Steven Dimengo has been named the Best Lawyers' 2012 Akron Tax Law Lawyer of the Year