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The Pennsylvania Code website reflects the Pennsylvania Code changes effective through 53 Pa.B. 8238 (December 30, 2023).

61 Pa. Code § 32.31. Dairying.


§ 32.31. Dairying.

 (a)  Equipment, machinery, parts and foundations therefor and supplies used directly in dairying. The purchase or use of tangible personal property or services performed thereon by a person engaged in the business of dairying shall be exempt from tax if the property is predominantly used directly by him in dairying operations. Purchases of vehicles required to be registered under 75 Pa.C.S. § §  101—9821 (relating to the Vehicle Code) as well as supplies and repair parts for the vehicles are subject to tax. There is no exemption for maintenance facilities or for materials or supplies to be used or consumed in a construction, reconstruction, remodeling, repair or maintenance of real estate other than machinery, equipment or parts therefor that may be affixed to the real estate. Beginning March 4, 1971, foundations for equipment and machinery became subject to tax and remained taxable until February 9, 1981. Effective February 7, 1981, foundations used to support equipment, machinery and parts used directly in dairying shall be exempt from tax.

   (1)  Direct use. In determining whether property is directly used, consideration shall be given to the following factors:

     (i)   The physical proximity of the property in question to the production process in which it is used.

     (ii)   The proximity of the time and use of the property in question to the time of use of other property used before and after it in the production process.

     (iii)   The active causal relationship between the use of the property in question and the production of a dairy product.

     (iv)   The fact that particular property may be considered essential to the conduct of the business of dairying because its use is required either by law or practical necessity does not, of itself, mean that the property is used directly in dairying operations.

   (2)  Property directly used; predominant use. The purchase or use by a dairyman of property in the following categories, when predominantly used directly in dairying, shall be exempt from tax. Where a single unit of the property is put to use in two different activities, one of which is a direct use and the other of which is not, the property may not be exempt from tax unless the dairyman makes use of the property more than 50% of the time directly in dairying operations.

     (i)   General. Machinery, equipment, parts and foundations therefor, and supplies which are used in the actual production or to transport, convey, handle or store milk and milk products from the time the raw milk enters the clarifier to the time the milk is bottled and capped, shall be considered to be directly used in dairying operations. The operations include clarifying, homogenization, pasteurization and cooling after pasteurization. Repair parts which are installed and become an integral part of such property shall also be exempt from tax. Effective March 4, 1971, foundations for machinery and equipment shall be subject to tax.

     (ii)   Testing and inspection. Property used to test raw milk prior to its use, and inspect milk and milk products throughout the production cycle, shall be considered to be directly used in dairying operations.

     (iii)   Cleaning of returnable containers. Property used to wash, sterilize or inspect returnable containers prior to their being filled shall be exempt when used in packaging a dairy product if the container will be delivered to the ultimate consumer.

     (iv)   Packaging; preserving. Wrapping equipment and supplies, including internal packing materials and returnable containers, used in packaging which passes to the ultimate consumer are directly used and, therefore, shall be exempt. Property which prevents or deters the occurrence of natural processes which, if not prevented or deterred, would spoil a dairy product shall be exempt from tax. Examples of the property include disinfectants and sterilizing agents used upon milk tanks, milk machinery and equipment and milk containers, refrigerating equipment used to preserve milk products while in production, and chemicals used to control insects, vermin and pests. However, equipment and supplies used to apply such property, including sprayers and brushes, shall be subject to tax.

     (v)   Research. Property which is used directly in research activities shall be exempt from tax, provided that the object of the research is the production of a new or improved product or method of producing a product. The exemption does not apply to property used in market research or in other research which is conducted with the objective of improving administrative efficiency.

   (3)  Property not directly used. Property in the following categories is not directly used in dairying operations, and the purchase or use of the property shall be subject to tax.

     (i)   Real estate. The term dairying does not include the construction, reconstruction, alteration, remodeling, servicing, repairing, maintenance or improvement of real estate. The purchase or use of tangible personal property, by a dairyman for that purpose shall be subject to tax, even though the structure may house or otherwise contain equipment or other facilities used directly in dairying.

     (ii)   Maintenance facilities. Maintenance, service and repair work is not a dairying operation. Maintenance facilities, including tools, equipment and supplies predominantly used in performing the work. (For example: chain hoists, tire spreaders, welding equipment, drills, sanders, wrenches, paint brushes and sprayers, oilers, absorbent compounds, dusting compounds, air blowers and wipers) shall be subject to tax. However, replacement parts which are used to replace worn parts upon exempt machinery and equipment (For example: motors, belts, screws, bolts or gears) and operating supplies which are actively and continuously used in the operation of exempt machinery and equipment (For example: fuel, lubricants, paint and compressed air) shall be also exempt from the tax. Equipment and supplies, including soaps and cleaning compounds, brushes, brooms, mops, and similar items, used in general cleaning and maintenance of dairy property shall be subject to tax.

     (iii)   Managerial, sales or other nonoperational activities. Property used in managerial, sales or other nonoperational activities is not directly used in dairying and, therefore, shall be subject to tax. This category includes but is not limited to property used in any of the following activities:

       (A)   Dairy management and administration. Office furniture, supplies and equipment, textbooks and other educational materials, books and records and all other property used in dairy record-keeping and other administrative and managerial work, whether on or off the production line, is subject to tax. The property includes, but is not limited to, supplies used to record the quality and quantity of work in production or goods in storage, the flow of work, the results of inspection or to instruct workers in routing work or other production activities.

       (B)   Selling and marketing. Property used in advertising dairy products for sale or in marketing, transporting dairy products to a market or to customers or selling dairy products, is not within the scope of the dairying exemption.

       (C)   Exhibition of dairy products. Property used in the exhibition of dairy products or of dairy operations shall be subject to tax.

       (D)   Safety and fire prevention. Property used to prevent or fight fires and equipment and supplies used for the programs as safety, accident prevention or fire prevention shall be subject to tax, even though such equipment or property is required by law, except for drugs, medicines and medical supplies exempted by section 204(17) of the TRC (72 P. S. §  7204(17)).

       (E)   Employe use. Property used for the personal comfort, convenience or use of employes, are subject to tax. Protective equipment, such as face masks, helmets, gloves, coveralls, goggles and the like worn by production personnel are exempt from tax.

       (F)   Space heating, cooling, ventilation and illumination. Property, such as machinery, equipment, fuel or power used to ventilate buildings, lighting for general illumination, air conditioning and other space cooling and space heating equipment are subject to tax unless its use is required in order to prevent the spoilage of dairy products.

       (G)   Preproduction activities. Property used to transport personnel or to collect, convey or transport raw milk and other property, and storage facilities or devices used to store or hold property, prior to its use in the first production stage, clarifying, are subject to tax.

       (H)   Property used during production. Property used in managerial, sales or other nonoperational activities are subject to tax even though it is used during the production operation. Illustrations of the property include safety, heating and ventilation equipment; planking or grating for crosswalks or platforms and maintenance equipment or facilities.

       (I)   Postproduction activities. Property used to transport or convey the finished product from the final dairying operation (which includes but does not extend beyond the operation of packaging for the ultimate consumer), and storage facilities or devices used to store the product, are not used directly in dairying and are taxable. For example, casing equipment, which loads glass bottles or paper bottles of milk into cases for ease of handling in delivery, is subject to tax. The cases used for this purpose is likewise taxable. Machinery, equipment, supplies and other property used to convey, transport, handle or store packaged milk shall be taxable.

       (J)   Waste disposal. Property used for waste handling and removal is not deemed to be directly used and shall be subject to tax.

 (b)  Materials incorporated as components into dairy products. The sale of personal property which will be physically incorporated by the dairyman as an ingredient or constituent of dairy products which will be sold in the regular course of his business, is a sale for resale. These materials may be purchased by the dairyman free of tax upon his presentation to the vendor of a properly executed exemption certificate certifying that the purchase is for resale. When the dairy is not licensed with the Department it shall be required to explain on the reverse side of the certificate why a sales tax number is not required.

 (c)  Use of exemption certificate. When a dairyman purchases exempt property under this section, he is required to prepare and deliver to the vendor a properly executed exemption certificate.


   The provisions of this §  32.31 amended through March 9, 1984, effective March 10, 1984, 14 Pa.B. 843. Immediately preceding text appears at serial pages (83003) to (83007).

Cross References

   This section cited in 61 Pa. Code §  32.1 (relating to definitions); and 61 Pa. Code §  32.25 (relating to steam, gas, electricity, fuel oil and kerosene).

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