Raw materials are purchased free from sales tax, because they are incorporated into the manufactured product for sale. EVERYONE. KNOWS. THAT. Tax is rarely overpaid on obvious and properly coded raw material purchases.
However, materials can occasionally become a part of the manufactured product for sale when they are not an obvious incorporation into the finished product and even if they are not coded to a raw material account. These oddball, hard to classify items most often get coded to supply or consumable types of accounts. These are the forgotten raw materials. The problem with forgotten raw materials is that sales or use tax is often erroneously overpaid on their purchase. If a material is incorporated into the final product in some way, shape, or form the purchase will most likely qualify for exemption from sales and use tax in your state, regardless of its general ledger account classification.
