Does machinery and equipment used to blast freeze, slow freeze, cool, and cold-store perishable food products for a manufacturer's customers qualify for Illinois's manufacturing machinery and equipment (MM&E) sales/use tax exemption?

Plain-English summary

The taxpayer ("COMPANY") operates seven Illinois facilities that act as an integrated part of its customers' ("Producers'") food manufacturing operations. Producers ship perishable foods -- chicken, beef, fish, and produce -- to COMPANY after completing their own part of the manufacturing process. COMPANY then blast freezes, slow freezes, cools, or cold-stores the product to convert it into (or maintain it as) a marketable, shelf-stable frozen or chilled good before it ships to third-party retailers.

COMPANY asked the Department whether the machinery and equipment used in these four processes -- compressors, vessels, evaporators, racking, condensers, and the ammonia refrigeration systems that drive them -- qualifies for Illinois's manufacturing machinery and equipment ("MM&E") exemption from Retailers' Occupation (sales) Tax under 86 Ill. Adm. Code 130.330 and 35 ILCS 120/2-45.

The Department agreed that it does. It reasoned that blast freezing, slow freezing, cooling, and cold storage all convert or preserve the product's "marketable state" and are essential, integrated steps in the overall manufacturing process (citing 35 ILCS 105/3-50(1) and two earlier PLRs reaching the same conclusion for similar cold-chain operations). Because the equipment is used primarily (more than 50% of the time) to freeze or cool food for sale, and not for general ventilation, climate control, or non-manufacturing purposes, it counts as exempt "machinery and equipment" -- either directly under the manufacturing-process test, or as "production related tangible personal property" under 86 Ill. Adm. Code 130.330(h). The Department specifically excluded from the ruling any equipment used for offices, break rooms, restrooms, building foundations/support structure, or general climate control not required by the cold-chain process.

What this means for you

Cold-storage, freezer-warehouse, and food-logistics operators

If your business performs blast freezing, slow freezing, cooling, or cold storage as part of a customer's manufacturing chain -- even though you don't do the initial cooking, canning, or cutting -- the equipment that reduces and maintains product temperature can qualify for the MM&E exemption, provided it's used primarily (over 50% of the time) for that purpose and not for general building climate control.

Food and beverage manufacturers who outsource freezing/cold storage

The ruling confirms the Department's view that a manufacturing process doesn't have to happen at one facility or under one owner: when a third-party contractor's freezing/cooling step is a necessary, integrated part of converting the product to its final marketable form, that contractor's equipment can qualify for exemption just as it would if the manufacturer performed the step itself.

Accountants and tax professionals

The ruling draws a clear line: machinery used for general ventilation, heating, cooling, or climate control not required by the manufacturing process does not qualify (86 Ill. Adm. Code 130.330(a)(5)), nor does foundation, building support, or employee-facility equipment. But machinery maintaining a precise temperature that is required to preserve a manufactured product can qualify, and post-2019 "production related tangible personal property" (pre-/post-production handling, receiving, quality control, storage, staging, and packing) is now separately eligible under 86 Ill. Adm. Code 130.330(h), following Public Act 101-9's expansion of the exemption.

Businesses considering requesting their own PLR

Because this is a Private Letter Ruling, it binds the Department only as to this specific taxpayer and only to the extent its stated facts were complete and accurate. Other taxpayers with similar cold-chain operations can look to this ruling as persuasive guidance on the Department's reasoning, but cannot rely on it directly -- they would need their own PLR (or GIL) to get a binding answer for their own facts.

Common questions

Q: Does freezing or refrigerating food count as "manufacturing" for Illinois sales tax purposes?
A: It can. The Department found that blast freezing, slow freezing, cooling, and cold storage of perishable food qualify as part of a "manufacturing process" under 35 ILCS 105/3-50(1) when they are integrated steps that convert or preserve the product's marketable state -- here, converting "fresh" product into a "frozen" one, or preventing spoilage until shipment.

Q: What equipment did the Department say qualifies for the exemption?
A: The freezer/cooling machinery (compressors, vessels, evaporators, condensers, ammonia refrigeration components) and the racking equipment used to promote airflow during freezing, cooling, and cold storage, so long as it's used primarily (more than 50% of the time) for that temperature-control purpose.

Q: What did the Department exclude from the ruling?
A: Equipment used for company functions other than temperature-controlled food processing (sales, accounting, marketing, HR); equipment in non-temperature-controlled areas like break rooms, offices, and restrooms; equipment that is part of the building's foundation or supporting structure; and equipment used for general ventilation, heating, cooling, or climate control not specifically required for the temperature-controlled food process.

Q: Can another company rely on this ruling for its own cold-storage operations?
A: Not directly. A Private Letter Ruling binds the Department only for the taxpayer who requested it, and only if that taxpayer's facts were accurate and complete. Other businesses can treat it as a strong indicator of how the Department will analyze similar facts, but should seek their own ruling for certainty.

Q: Does the exemption cover more than the freezing/cooling machinery itself?
A: Potentially yes. Since 2019 (Public Act 101-9), the MM&E exemption was expanded to include "production related tangible personal property" -- items used for pre-production and post-production material handling, receiving, quality control, inventory control, storage, staging, and packing for shipping -- under 86 Ill. Adm. Code 130.330(h).

Citations and references

Statutes and regulations:

• 86 Ill. Adm. Code 130.330 (manufacturing machinery and equipment exemption)
• 86 Ill. Adm. Code 130.330(a)(5) (essential-to-business use alone is not enough for exemption)
• 86 Ill. Adm. Code 130.330(b)(2) (manufacturing process defined)
• 86 Ill. Adm. Code 130.330(c)(2) (machinery defined)
• 86 Ill. Adm. Code 130.330(h) (production related tangible personal property)
• 86 Ill. Adm. Code 130.331 (former Manufacturer's Purchase Credit)
• 35 ILCS 105/3-50(1) (manufacturing process definition, Use Tax Act)
• 35 ILCS 120/2-45 (Retailers' Occupation Tax MM&E exemption)
• 2 Ill. Adm. Code 1200.110 (PLR procedures and binding effect)
• 2 Ill. Adm. Code 1200.120 (General Information Letters)

Prior rulings discussed in this PLR:

• Illinois PLR No. ST 14-0002-PLR (06/26/2014) -- blast freezing, slow freezing, cooling, and "deep chill" cold storage held to be manufacturing
• Illinois PLR No. ST 16-0004-PLR (07/08/2016) -- refrigeration and racking equipment for bakery/meat/dairy cold storage held exempt

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2023.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2023/ST-23-0003-PLR.pdf

Original ruling text

ST-23-0003-PLR 06/02/2023 MANUFACTURING MACHINERY & EQUIPMENT
A cold storage process required to maintain a manufactured product at a specific
temperature, can qualify for the exemption. See 86 Ill. Adm. Code 130.330. (This
is a PLR.)
June 2, 2023

NAME1 and NAME2
ADDRESS1 and ADDRESS2
Dear NAME1 and NAME2:
This letter is in response to your letter dated September 2, 2022, in which you
requested information. The Department issues two types of letter rulings. Private Letter
Rulings (“PLRs”) are issued by the Department in response to specific taxpayer
inquiries concerning the application of a tax statute or rule to a particular fact situation.
A PLR is binding on the Department, but only as to the taxpayer who is the subject of
the request for ruling and only to the extent the facts recited in the PLR are correct and
complete. Persons seeking PLRs must comply with the procedures for PLRs found in
the Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General
Information Letter (“GIL”) is to direct taxpayers to Department regulations or other
sources of information regarding the topic about which they have inquired. A GIL is not
a statement of Department policy and is not binding on the Department. See 2 Ill. Adm.
Code 1200.120. You may access our website at www.tax.illinois.gov to review
regulations, letter rulings and other types of information relevant to your inquiry.
Review of your request disclosed that all the information described in paragraphs
1 through 8 of Section 1200.110 appears to be contained in your request. This Private
Letter Ruling will bind the Department only with respect to COMPANY, for the issue or
issues presented in this ruling, and is subject to the provisions of subsection (e) of
Section 1200.110 governing expiration of Private Letter Rulings. Issuance of this ruling
is conditioned upon the understanding that neither COMPANY, nor a related taxpayer is
currently under audit or involved in litigation concerning the issues that are the subject
of this ruling request. In your letter you have stated and made inquiry as follows:
Facts
COMPANY ("COMPANY" or the "Company") operates seven facilities
(LOCATION1, LOCATION2, LOCATION3, LOCATION4, LOCATION5,
LOCATION6, and LOCATION7) in the state of Illinois as [sic] integrated
part of their customer's manufacturing operations. Before perishable
foods, such as chicken, beef, fish, and produce, reach these COMPANY
locations in Illinois, the Company's customers ("Producers") begin the
manufacturing process at their manufacturing plants. Once the Producers
have completed their part of the manufacturing process, perishable foods
are then transported to COMPANY's locations for further processing.

COMPANY/NAME1 and NAME2
Page 2
June 2, 2023
COMPANY then engages in processes discussed below to transform the
perishable products into a marketable state, frozen food.
Receiving (All locations) - Perishable food is received by truck or rail at the
Company location. Producers generally deliver goods in bulk to
COMPANY's manufacturing facilities. Once received, the food is unloaded
onto a temperature-controlled dock. From there, food is transferred from
pallet A to pallet B. During this transfer process, plastic slats that look
similar to egg crates are inserted between layers in order to promote
airflow through the product.
Product is then transported to either Blast Freezing, Slow Freezing,
Cooling, or Cold Storage via forklift or automated storage and retrieval
system (LOCATION6).
Option 1 - Blast Freezing, Deslatting, and Cold Storage
Locations (LOCATION4 and LOCATION5) - Blasting [sic] freezing is a
process used to quickly freeze perishable food. In order to freeze the food,
equipment and supplies including compressors, vessels, evaporators,
racking, condensers, and ammonia are utilized. The racking and
evaporators are located in blast cells where freezing takes place and the
compressors, vessels and condensers are in the engine room.
Compressors are used to compress ammonia gas. During compression,
the temperature of ammonia increases. Coils in the condenser release the
heat from the ammonia that occurred during the compression process. As
heat is released, the highly pressurized ammonia cools and is liquified and
drains back into the high-pressure vessel. The high-pressure ammonia is
transferred to a low-pressure vessel where it is then pumped out to an
evaporator in each blast cell. The evaporator fan, part of the evaporator,
circulates cold air over the fresh product and returns warmer air to the
heat exchanger within the evaporator. While completing this process in the
blast cell, the liquified ammonia begins to boil and vaporize as it is
circulated back to the low-pressure vessels and compressor in the engine
room for recompression. The product quickly freezes as part of this
circular process.
Blast freezing reduces cellular damage that takes place when food is
slowly frozen, resulting in a higher quality product. Additionally, blast
freezing dramatically slows molecular and microbial activity in perishable
food, preventing spoilage and contamination, and extending the useful
and marketable life of food.
After blast freezing is complete, product is transported to a staging area to
remove slats. Slats are removed from the pallet through use of a pallet

COMPANY/NAME1 and NAME2
Page 3
June 2, 2023
inverter. Pallets are titled horizontally, slats are removed, and repositioned
on the ground. After repositioning the pallet, the product on the pallet is
shrink-wrapped and transported to cold storage
Product previously blast frozen by COMPANY, is transported to cold
storage where product temperatures are maintained at zero (0) to -5
degrees. Product will remain in cold storage until Producer's [sic] schedule
shipment to third parties.
Option 2 - Slow Freezing
Locations (LOCATION2, LOCATION4, LOCATION5, and LOCATION6) Slow freezing is similar to the blast freezing process. The same equipment
used to blast freeze fresh food is also used to slow freeze fresh food. The
primary difference between slow and blast freezing pertains to the time
required to freeze product and the location freezing takes place. When
fresh product goes through the slow freezing process, additional time is
needed, and product is frozen in a large room rather than a blast cell.
Slow freezing slows molecular and microbial activity, preventing spoilage
and contamination, and extending the useful and marketable life of the
product.
Option 3 - Cooling
Locations (LOCATION1, LOCATION4, and LOCATION5) - Cooling differs
from both the slow and blast freezing process as the goal of placing
product in coolers is not to freeze product, but to maintain temperatures
above freezing. Cooling occurs in a large room where evaporators are
used to maintain product temperatures slight [sic] above freezing.
Cooling slows molecular and microbial activity, preventing spoilage and
contamination, and extending the useful and marketable life of the
product.
Option 4 - Cold Storage
Locations (LOCATION2, LOCATION3, LOCATION4, LOCATION5,
LOCATION6, and LOCATION7) - Product previously blast frozen by
COMPANY and/or frozen by third parties, is transported to cold storage
where product temperatures are maintained at zero (0) to -5 degrees.
Product will remain in cold storage until Producer's [sic] schedule
shipment to third parties.

COMPANY/NAME1 and NAME2
Page 4
June 2, 2023
Shipping (All locations) - After product has been frozen, cooled, or stored,
the product is then sequenced and staged for outbound transportation at a
refrigerated dock. Outbound transportation occurs via truck or rail to third
party retailers.
Evidentiary Documentation
The Company's process and facility locations are described within the
webpage provided below:
•

Blast freezing locations and process: ADDRESS3.

Taxpayer's Position
Blast freezing, slow freezing, cooling, and cold storage qualifies as a
"manufacturing process".
Law
Illinois does not define the term "manufacturer".
"Manufacturing process" means the production of an article of tangible
personal property, whether the article is a finished product or an article for
use in the process of manufacturing or assembling a different article of
tangible personal property, by a procedure commonly regarded as
manufacturing, processing, fabricating, or refining that changes some
existing material into a material with a different form, use, or name. In
relation to a recognized integrated business composed of a series of
operations that collectively constitute manufacturing, or individually
constitute manufacturing operations, the manufacturing process
commences with the first operation or stage of production in the series
and does not end until the completion of the final product in the last
operation or stage of production in the series.1
The Department of Revenue has released several private letter rulings
over the years discussing how processes performed by other taxpayers,
similar to COMPANY, such as, blast freezing, slow freezing, cooling, and
cold storage qualify as a "manufacturing process".
In an Illinois private letter ruling that was issued in 2014, No. ST 14-0002PLR, 06/26/2014, the private letter ruling committee concluded that a
taxpayer performing activities, such as, blast freezing (referred to as the
"industrial freezer"), slow freezing (referred to as the "industrial freezer"),
1

35 ILCS 105/3-50(1)

COMPANY/NAME1 and NAME2
Page 5
June 2, 2023
cooling (referred to as the "cooler"), and cold storage (referred to as the
"deep chill") in Illinois performed a "manufacturing process". Therefore,
machinery and equipment primarily used in these manufacturing
processes qualified for the exemption provided through Ill. Admin. Code
130.330(a). Specific conclusions reached in the ruling are referenced
below.
"The Freezer Machinery and Equipment and Racking Equipment
are machinery and equipment used primarily in a manufacturing
process for purposes of the manufacturing machinery and
equipment exemption. Thus, the retailer's occupation tax and use
tax does not apply to the sale of the Freezer Machinery and
Equipment and Racking Equipment."
The taxpayer defined the Freezer Machinery and Equipment and Racking
Equipment as follows:
The Freezer Machinery and Equipment is an industrial ammonia
refrigeration system comprised of various refrigeration components
including compressors, evaporators, vessels, pumps, heat
exchangers, condensers, and associated piping, controls and
valves. The Racking Equipment is comprised of specially designed
racks that are essential to the manufacturing process because they
facilitate the airflow through and around boxed products. It would
not be possible to reduce the temperature of product were it pile
stacked without the Racking Equipment. Both the Freezer
Machinery and Equipment and Racking Equipment are essential to
the manufacturing process.
Similar to the private letter ruling referenced above, the private letter ruling
committee also concluded in Illinois Private Letter Ruling No. ST 16-0004PLR, 07/08/2016 that a "Refrigeration System" and "Racking Equipment"
was used in a manufacturing process and therefore qualified for the
exemption provided through Ill. Admin. Code 130.330(a). Specific
conclusions reached in the ruling are referenced below.
The Refrigeration System and Racking Equipment contribute to and
are essential to the Taxpayer's integrated manufacturing process,
which includes the reduction and maintenance of product
temperatures during post-production storage to prevent spoilage
and contamination of the Taxpayer's products prior to shipment. In
particular, the Refrigeration System reduces and maintains product
temperatures and enables the Taxpayer's perishable bakery, meat,
and dairy products to be maintained at standards and requirements
necessary to prevent product spoilage and contamination so that

COMPANY/NAME1 and NAME2
Page 6
June 2, 2023
the Taxpayer's products may be subsequently sold for human
consumption. The Racking Equipment is specifically designed and
essential to the reduction and maintenance of product temperatures
by creating space around the sides of the product, which protects
the stacked product from destruction, and facilitates the
organization of the products in a manner that provides proper air
flow around and between the stored products. Without the Racking
Equipment, airflow between the products would be restricted, and
the reduced temperature created by the Refrigeration System
would not be conducted in a uniform, timely and balanced manner,
resulting in spoilage and contamination.
Without proper temperature reduction and temperature
maintenance, the Taxpayer's manufacturing process would be
ineffective as its perishable bakery, meat and dairy products would
spoil and could not be subsequently sold for human consumption.
While no cooking, canning, or cutting processes will be conducted
at the cold storage facility, the continuous temperature reduction
and temperature maintenance of the Taxpayer's products occurring
at the facility constitutes an essential aspect of the Taxpayer's
overall integrated manufacturing process.
Because both the Refrigeration System and Racking Equipment
and their components are "machinery" and "equipment" and
contribute and are essential to the Taxpayer's manufacturing
process, the Refrigeration System and Racking Equipment is
machinery and equipment for purposes of the Manufacturing
Machinery and Equipment exemption.
The taxpayer defined
Equipment as follows:

the

Refrigeration Equipment and Racking

The main components of the Refrigeration System will be
constructed and located within the engine room of the Taxpayer's
cold storage facility. In addition, numerous pipes, valves, controls,
and control wiring will connect through the engine room but be
located throughout the facility building and roof in order to facilitate
the temperature reduction and maintenance to the appropriate
areas of the facility. The Refrigeration System is custom-designed
to the Taxpayer's specifications, purchased from multiple vendors,
and assembled on-site at the facility. The Refrigeration System will
be used exclusively to reduce and maintain temperatures in the
cold storage areas of the facility that will contain the Taxpayer's
perishable bakery, meat, and dairy products. The Refrigeration
System will not be used for general ventilation, cooling, or climate

COMPANY/NAME1 and NAME2
Page 7
June 2, 2023
control, or in any other manner that is not required by the
Taxpayer's manufacturing process. The Taxpayer will install an
ancillary commercial heating and cooling system to provide
temperature control to non-cold storage areas of the facility,
including offices, restrooms, break rooms, engine rooms and other
common areas. The machinery and equipment related to the
ancillary commercial heating and cooling are not included in the
Taxpayer's Freezer Machinery and Equipment for purposes of this
PLR. Likewise, any components that form the foundation or support
of the facility are not considered part of the Taxpayer's Freezer
Machinery and Equipment. The Refrigeration System will be in
continuous use as there will be a constant flow of perishable
products through the cold storage facility so that the Refrigeration
System will not be idle.
The Racking Equipment will be located within the cold storage
areas of the Taxpayer's cold storage facility. The Racking
Equipment is specially designed to create space around the sides
of the pallets of product to ensure proper air flow and temperature
reduction between products. Without the Racking Equipment,
airflow between the products would be restricted, the cold air
created by the Refrigeration System would not effectively cool the
products and heat from biological processes would spoil and
contaminate the product. Thus, the Racking Equipment protects the
product from destruction. In addition, the Racking Equipment
facilitates efficient storage of the Taxpayer's perishable bakery,
meat and dairy products when they undergo temperature reduction
and temperature maintenance.
Analysis
35 ILCS 105/3-50(1) states a "manufacturing process" means the
production of an article of tangible personal property, whether the article is
a finished product or an article for use in the process of manufacturing or
assembling a different article of tangible personal property, by a procedure
commonly regarded as manufacturing, processing, fabricating, or refining
that changes some existing material into a material with a different form,
use, or name. In relation to a recognized integrated business composed of
a series of operations that collectively constitute manufacturing, or
individually constitute manufacturing operations, the manufacturing
process commences with the first operation or stage of production in the
series and does not end until the completion of the final product in the last
operation or stage of production in the series.

COMPANY/NAME1 and NAME2
Page 8
June 2, 2023
Based on the definition above, blast freezing, slow freezing, cooling, and
cold storage qualify as a "manufacturing process". The services provided
by COMPANY through these phases are required to "protect the integrity
of the product". Additionally, blast freezing, slow freezing, cooling, and
cold storage qualify as manufacturing activities as they support the actual
production or assembly of the finished product.
Blast Freezing, Deslatting, Cold Storage and Slow Freezing
The Company's blast freezing and slow freezing of food products on
behalf of manufacturers serves a critical role in the integrated food
manufacturing process. Below is a summary of the relationship between
the Producers and COMPANY and why the food received by COMPANY
is not "ready for sale" until the Company's manufacturing activities have
been completed.
When perishable products marketed as a "frozen good" are transported
from the Producer's manufacturing facilities to COMPANY, this product is
stored in a manner that keeps the product "fresh". In order to sell this
"fresh" product in its intended marketable state of a "frozen good", the
"fresh" product must be converted to a "frozen" state. COMPANY's blast
and slow freezing processes at its facilities in Illinois are part of the
manufacturer's integrated manufacturing process in the same way that
blast and slow freezing would be part of manufacturing if performed by the
manufacturer at its own facility. Here, manufacturers that do not have blast
and slow freezing machinery or expertise with this process contract with
COMPANY to integrate the Company's blast and slow freezing process
into the Producer's manufacturing process.
The blast and slow freezing processes at the Illinois facilities discussed
above are essential to convert the product to a frozen state for end-use
consumers for at least two important reasons. First, USDA regulations
primarily set forth in 9 CFR § 381 (related to poultry and poultry products),
provide mandatory requirements that must be met by producers and
manufacturers to sell poultry as a "frozen" product. Second, the blast and
slow freezing process is a recognized method of preservation for disease
control (as an alternative to curing, smoking, cooking, or canning) of food
items for sale to consumers. Blast and slow freezing processes are
essential to extend the shelf-life the frozen food may be ultimately sold to
end-use consumers.
Based on COMPANY's critical role in the manufacturer's integrated
manufacturing process the Company's blast freezing, deslatting, cold
storage and slow freezing activities that convert fresh products by physical

COMPANY/NAME1 and NAME2
Page 9
June 2, 2023
means into a frozen state fit squarely with the definition of a
"manufacturing process" in 35 ILCS 105/3-50(1).
Favorable Rulings from Illinois and Other Jurisdictions
Arkansas - Blast Freezing Operations Opinion 20140508-S, 04/04/2016
Arkansas- Blast Freezing Operations Opinion 20151008-S, 04/04/2016
Indiana - Merchandise Warehouse Co., Inc., Petitioner, v. Indiana
Department of State Revenue Respondent., 87 NE3d 12, 12/13/2017
(copy enclosed)
Illinois Private Letter Ruling, No. ST 16-0004-PLR, 07/08/2016
Illinois Private Letter Ruling No. ST 14-0002-PLR, 06/26/2014
Missouri Private Letter Ruling No. LR 7419, 10/10/2014
New York MIDDLEPORT COLD STORAGE, INC. for Revision of a
Determination or for Refund of Sales and Use Taxes under Articles 28 and
29 of the Tax Law for the Period June 1, 1983 through..., 806811,
03/14/199
Texas Comptroller's Decision, No. 5744, 07/30/1974
Mandatory representations
COMPANY certifies the following representations:
•

Company isn't currently under audit by the Department;

•

Company has not submitted a claim for refund involving
transactions or issues contained in the request;

•

The issues contained in the request are not currently the subject of
litigation;

•

Similar private letter rulings will be issued to other states throughout
the U.S; and

•

Under penalties of perjury, I declare that I have examined this
request, including accompanying documents, and to the best of my
knowledge and belief, the facts presented in support of the
requested ruling are true, correct, and complete.

COMPANY/NAME1 and NAME2
Page 10
June 2, 2023
Company is contemplating submission of a second sales and use refund
claim that would include, in part, transactions relevant to this private letter
ruling request. We will notify the Department if a refund claim is submitted
prior to receiving a response from the Department on this matter.
DEPARTMENT’S RESPONSE:
Based on the representations in your letter, it is our understanding that
COMPANY uses the freezer, cooling, and cold storage machinery and equipment to
freeze, cool, and maintain in cold storage certain food products. Perishable foods, such
as chicken, beef, fish, and produce, arrive at the facility directly from COMPANY’s
customers who begin the manufacturing process at their manufacturing plants. The
products are then frozen or cooled and placed in cold storage by COMPANY to
maintain the perishable products in a marketable state. The blast freezing and slow
freezing processes use compressors, vessels, evaporators, racking, condensers, and
ammonia. The cooling occurs in a large room where evaporators are used to maintain
product temperature slightly above freezing. It is our understanding that the plastic slats
are placed between each layer to promote airflow through the product. The described
equipment is necessary to maintain the temperature of products in a refrigerated or
frozen state to be sold and ultimately consumed. It is our understanding that this
equipment will be used primarily (more than 50 percent of the time) to freeze or cool
food products for sale and will not be used for general ventilation, cooling, or climate
control, or in any other manner that is not required by the manufacturing process and
will only be used to provide temperature control for the processes you describe.
Retailers' Occupation Tax does not apply to sales of machinery and equipment
used primarily in the manufacturing or assembling of tangible personal property for
wholesale or retail sale or lease. See 86 Ill. Adm. Code 130.330. The manufacturing
process is the production of articles of tangible personal property or assembling
different articles of tangible personal property by procedures commonly regarded as
manufacturing, processing, fabricating, or refining which changes some existing
material or materials into a material with a different form, use, or name. These changes
must result from the process in question and be substantial and significant. See
Section 130.330(b)(2).
Machinery means major mechanical machines or major components of such
machines contributing to a manufacturing or assembling process, including machinery
and equipment used in the general maintenance or repair of such exempt machinery
and equipment or for in-house manufacture of exempt machinery and equipment. See
Section 130.330(c)(2).
However, machinery and equipment does not include
foundations for, or special purpose buildings to house or support, machinery and
equipment. Generally, items such as the framing for a building and its walls, ceilings,
floors, and doors would not qualify for the exemption.

COMPANY/NAME1 and NAME2
Page 11
June 2, 2023
The fact that particular machinery or equipment may be considered essential to
the conduct of the business of manufacturing or assembling because its use is required
by law or practical necessity does not, of itself, mean that machinery or equipment is
used primarily in manufacturing or assembling. See Section 130.330(a)(5). In addition,
machinery or equipment that is used for general ventilation, heating, cooling, climate
control or general illumination, not required by the manufacturing process would not
qualify for the manufacturing machinery and equipment exemption. Generally, items
such as sprinkler systems and employee facilities such as lunchrooms, restrooms, and
locker rooms would not qualify for the exemption.
We note that Public Act 101-9 expanded the manufacturing and assembling
machinery and equipment (“MM&E”) exemption to allow items that had previously been
eligible for the now-expired Manufacturer’s Purchase Credit (“MPC”) (i.e., “production
related tangible personal property”) to be eligible for the MM&E exemption. See 86 Ill.
Adm Code 130.331, Manufacturer’s Purchase Credit. Beginning on July 1, 2019, the
MM&E exemption includes production related tangible personal property. Production
related tangible personal property includes all tangible personal property used or
consumed in a production related process by a manufacturer in a manufacturing facility
in which a manufacturing process takes place or by a graphic arts producer in graphic
arts production. See 86 Ill. Adm. Code 130.330(h). For example, the following uses of
tangible personal property by manufacturers in a manufacturing facility are considered
production related: tangible personal property used or consumed for purposes of preproduction and post-production material handling, receiving, quality control, inventory
control, storage, staging, and packing for shipping or transportation.
The Department has reviewed the items described in your letter and has
determined that they qualify for the MM&E exemption, either because the tangible
personal property qualifies as machinery and equipment used by the Company primarily
in the process of manufacturing or assembling of tangible personal property for
wholesale or retail sale or lease, or because it qualifies as production related tangible
personal property. The Department makes no determination regarding tangible
personal property that is titled and registered; tangible personal property that is used for
Company functions other than temperature-controlled food processing (e.g., sales,
accounting, marketing, or HR); tangible personal property that is used in a general area
of the facility that is not required to be temperature-controlled, such as employee break
rooms, offices, and restrooms; tangible personal property that is part of the foundation
or supporting structure of the facility as renovated and expanded; or tangible personal
property that is used for general ventilation, heating, cooling, climate control, or lighting
of the facility that is not specifically required for temperature-controlled food processing.
Blast Freezing, Slow Freezing, and Cooling Machinery and Equipment
Machinery or equipment that is required for processing, such as freezing and
cooling equipment that maintains a precise temperature as part of the processing in

COMPANY/NAME1 and NAME2
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June 2, 2023
order to preserve a manufactured product, can qualify for the exemption if used
primarily for that purpose. The Department has reviewed the information that you have
provided. Based on your descriptions of how the equipment is used, the Department is
of the opinion that the blast freezing, slow freezing, and cooling machinery and
equipment described in your letter qualifies for the Manufacturing Machinery and
Equipment exemption from Illinois Retailers’ Occupation Tax under 35 ILCS 120/2-45.
Without the freezer and cooling machinery and equipment, the product would spoil and
could not be subsequently sold for human consumption.
Cold Storage Machinery and Equipment
Similarly, based on your descriptions of how the cold storage equipment is used,
the Department is of the opinion that the cold storage machinery and equipment
qualifies for the Manufacturing Machinery and Equipment exemption from the Illinois
Retailers’ Occupation Tax under 35 ILCS 120/2-45 either because the tangible personal
property qualifies as machinery and equipment used primarily in the process of
manufacturing or assembling of tangible personal property for wholesale or retail sale or
lease, or because it qualifies as production related tangible personal property.
The factual representations upon which this ruling is based are subject to review
by the Department during the course of any audit, investigation, or hearing and this
ruling shall bind the Department only if the factual representations recited in this ruling
are correct and complete. This Private Letter Ruling is revoked and will cease to bind
the Department 10 years after the date of this letter under the provisions of 2 Ill. Adm.
Code 1200.110(e) or earlier if there is a pertinent change in statutory law, case law,
rules or in the factual representations recited in this ruling.
If you have further questions concerning this Private Letter Ruling, you may
contact me at (217) 782-2844. If you have further questions related to the Illinois sales
tax laws, please visit our website at www.tax.illinois.gov or contact the Department’s
Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Samuel J. Moore
Chairman, Private Letter Ruling Committee
SJM:rkn