Loctite Corp. v. Tracy

The issue presented is whether purchased items used to design and create a prototype that do not become a part of a package are “materials” within the meaning of the sales tax exemption for packages under R.C. 5739.02(B)(15).1 Because these items are not an essential part of the packages used to hold the product, they are not exempt from taxation.

During the relevant audit period, R.C. 5739.02(B)(15), which exempts from sales taxes a manufacturer’s purchase of packages, provided:

“(B) The tax does not apply to the following:

a * * *

“(15) Sales to persons engaged in any of the activities…