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The Occupational Safety and Health Act of 1970 requires employers to provide a workplace free from recognized hazards that could cause death or serious injury to employees, and the Occupational Safety and Health Administration (OSHA) creates specific standards and regulations to implement this law. According to the law, state safety standards can be more stringent than OSHA’s standards but not less stringent. 26 states are known as federal OSHA states because they adopted OSHA’s standards without making any changes. The other 26 states are known as state plan states because they adopted OSHA standards plus some more stringent requirements. Since OSHA’s creation by the U.S. Congress in 1974, the annual rate of fatal occupational injuries has decreased by more than 50%.
OSHA’s concern is for safety without regard to taxable or non-taxable costs. OSHA regulations are especially applicable to manufacturing facilities where workplace hazards are common due to the nature of the operations. Although OSHA and the states set the standards for safety, it is the employer’s responsibility to know what those standards are and to ensure that facilities and employees comply with the requirements. It is also the employer’s responsibility to comply with all applicable tax regulations. In order to encourage business by reducing the total cost for safety related equipment, some states allow sales and use tax exemptions for special clothing or equipment that is used to protect employees. For more than 10 years, Smart Tax USA has been helping companies save money by identifying these types of tax exemptions.
For example in Texas, protective goggles or gloves, ear plugs, hairnets required to be worn during food processing, or static-free wrist guards that workers wear during an electric powered manufacturing process may be exempt from sales tax if the equipment is utilized to provide safety for workers who are involved in the company’s predominant business activity. Issues related to a company’s predominant use may be simple or complex. In a manufacturing facility where employees must wear safety shoes, a tax exemption may apply to purchases of special shoes worn during primary manufacturing operations but not to shoes worn during routine plant maintenance. Since each state’s requirements are different, knowledge of each state’s tax regulations is essential for companies that are engaged in interstate commerce.
Some tax incentives are statutory and others are discretionary. Statutory tax incentives are defined by law and they apply to all businesses within a jurisdiction. Discretionary tax incentives are awarded on a case-by-case basis and they are typically offered in order to attract desirable employers to either relocate into or expand business within a particular jurisdiction. Examples of discretionary tax incentives may include sales and use tax exemptions for OSHA required safety equipment that is used to protect employees from harm during the operation of primary facility equipment.
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More than 5,000 U.S. jurisdictions have changed their sales and use tax legislation in the last decade. SMART TAX USA determines how these law changes provide additional exemptions, credits and tax incentives for your company.
State Courts are constantly interpreting sales tax laws and regulations. SMART TAX USA deciphers these complex laws and regulations to maximize cost saving benefits.
In today’s economy many states are adding additional tax exemptions, credits and tax incentives to create job growth within the manufacturing and industrial spectrum. SMART TAX USA specialized, comprehensive analysis can determine how these new exemptions directly affect your business and could result in a reduction of current and future tax liabilities providing significant tax savings for your business!
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