Meet your evolving needs with three integrated business lines in one professional services firm.


Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.

Warehouse Inventory Laptop Review

Time is running out for Illinois manufacturers to meet the June 30, 2013, filing deadline for the Illinois Manufacturer’s Purchase Credit (MPC), which can be applied against state sales or use tax on future purchases of production-related tangible personal property.

Illinois Manufacturer’s Purchase Credit Filing Deadline Is Approaching

  • 6/18/2013

Illinois Manufacturer’s Purchase Credit Filing Deadline Is Approaching

Time is running out for Illinois manufacturers to meet the June 30, 2013, filing deadline for the Manufacturer’s Purchase Credit (MPC).

The MPC is earned on the state tax-exempt purchase of manufacturing equipment or machinery (and their repair parts), and is equal to half of what the tax would have been if the purchase had not been exempt. The credit can be applied against state sales or use tax on future purchases of production-related tangible personal property that does not otherwise qualify for the manufacturing machinery and equipment exemption.

“The tax savings made possible by the MPC can be a tremendous boost to cash flow,” says Tom Chrzanowski, state and local tax senior manager with CliftonLarsonAllen. “More Illinois manufacturers need to learn about the credit and take advantage of this incentive to expand manufacturing capabilities within the state.”

MPC Example  
Exempt equipment purchase amount $10,000
Sales tax savings $625 (6.25 percent tax rate)
MPC $312.50* (half of $625)

*This amount can be used to reduce the sales tax liability on certain future purchases of production-related tangible personal property.

To claim and report MPC, taxpayers must file two forms before the June 30 deadline:

Using the MPC

To use the credit on qualified purchases from Illinois vendors, taxpayers should inform their supplier that they have MPC available to satisfy all or some of the use tax liability on the purchase. When making the purchase, the taxpayer provides the supplier with Form ST-16-C, which is simply a credit certificate stating how much credit the buyer is using on a particular purchase. The seller then reduces the amount of the tax liability by the amount of the MPC being used.

If the taxpayer does not have Form ST-16-C, certification for the MPC may be included in the purchase order as long as it includes the following:

  • The taxpayer’s name and address
  • Purchase date
  • Buyer’s Illinois account identification number
  • The MPC amount being claimed
  • A statement that the taxpayer is satisfying all or part of the Illinois Use Tax or Service Use Tax liability (not to exceed 6.25 percent of the purchase price) with accumulated MPC

To use the credit on qualified purchases from vendors not registered in Illinois, the taxpayer should enter the total amount of MPC being used on line 16a of Form ST-1, Sales and Use Tax Return. Taxpayers may also use Form ST-16-C to seek refunds from vendors on sales tax previously paid on production-related items.

Unused MPC expires December 31 of the second calendar year following the calendar year in which the credit arose. For example, if machinery for a new production line was purchased on May 1, 2013, the taxpayer would have until December 31, 2015, to use the credit.

How we can help

Eligibility for the MPC depends on the type of equipment or machinery purchased, and whether it is used in manufacturing production. Calculating the MPC can become complicated and overwhelm the limited internal resources of some manufacturers. CliftonLarsonAllen professionals are ready to assist with calculating potential credits, filing the proper forms, and providing guidance on how to optimize the future use of the credits.

 


Chuck Taylor, Manufacturing Senior Manager
chuck.taylor@cliftonlarsonallen.com or 630-954-8130