In a case of major importance to manufacturers in Louisiana, the Louisiana Supreme Court held that purchases by International Paper, Inc. (“IP”) of three chemicals (sodium chlorate, elemental oxygen and hydrogen peroxide) used in the manufacturing process of white paper were excluded from Louisiana sales and use taxes under the “further processing exclusion.” International Paper, Inc. v. Cynthia Bridges, Secretary, Department of Revenue, State of Louisiana, No. 07-C-1151 (La. 1/16/08) (hereinafter referred to as “International Paper”). The Court recognized the well-established, three-part test for applying the further processing exclusion. The exclusion applies when the raw materials (1) become recognizable and identifiable components of the end products, (2) are beneficial to the end products, and (3) are material for further processing and, as such, are purchased with the purpose of inclusion in the end products. The Court rejected the notions that the raw materials themselves must be present in the end products and that the further processing of the raw materials must be the primary purpose for purchasing the raw materials. Continue reading >