Tenn. Code Ann. § 67-6-209
Use of property produced or severed from earth - Exemptions
- (a) Where a manufacturer, producer, compounder or contractor erects or applies tangible personal property, that the manufacturer, producer, compounder or contractor has manufactured, produced, compounded or severed from the earth, other than:
- (1) Any material severed from the earth and moved from one (1) place to another on the same construction or job site; and
- (2) Dirt, soil, earth or any other kind of material when used for fill, whether from the same construction or job site or elsewhere;
such person so using the tangible personal property shall pay the tax levied in this section on the fair market value of such tangible personal property when used, without any deductions whatsoever; provided, that this subsection (a) shall not be construed to apply to contractors or subcontractors who fabricate, erect or apply tangible personal property that becomes a component part of a building, and that is not sold by them as a manufactured item.
- (b) Where a contractor or subcontractor defined in this chapter as a dealer uses tangible personal property in the performance of the contract, or to fulfill contract or subcontract obligations, whether the title to such property be in the contractor, subcontractor, contractee, subcontractee, or any other person, or whether the title holder of such property would be subject to pay the sales or use tax, except where the title holder is a church, private nonprofit college or university and the tangible personal property is for church, private nonprofit college or university construction, such contractor or subcontractor shall pay a tax at the rate prescribed by § 67-6-203 measured by the purchase price of such property, unless such property has been previously subjected to a sales or use tax, and the tax due thereon has been paid. The exemption provided for in this subsection (b) for private nonprofit colleges or universities shall apply only to the state portion of the sales tax. The sales or use tax levied by this chapter shall not apply to carpet installed for a church when the church is exempt from sales or use taxes under § 67-6-322. For purposes of this section, "private nonprofit college or university" includes a nonprofit academic medical center and teaching hospital that operates as a separate nonprofit corporation, but which, when founded, was operated as a division of a private nonprofit college or university and that continues to provide education and training of physicians, nurses, and other allied healthcare professionals.
- (c) The tax imposed by this section shall have no application where the contractor or subcontractor, and the purpose for which such tangible personal property is used, would be exempt from the sales or use tax under any other provision of this chapter. However, the transfer of tangible personal property by a contractor who contracts for the installation of such tangible personal property as an improvement to realty does not constitute a sale, except as provided in § 67-6-102(39), and the contractor shall not be permitted on this basis to obtain the benefit of any exemptions or reduced tax rates available to manufacturers under § 67-6-102(46)(E) or § 67-6-206. Each location of a taxpayer will be considered separately in determining whether the taxpayer qualifies or is disqualified as a manufacturer at that location.
- (d) The tax imposed by this section or by any other provision of this chapter shall have no application with respect to the use by, or the sale to, a contractor or subcontractor of atomic weapon parts, source materials, special nuclear materials and by-product materials, all as defined by the Atomic Energy Act of 1954 (42 U.S.C. § 2011 et seq.), or with respect to such other materials as would be excluded from taxation as industrial materials under § 67-6-102(46)(E), when the items referred to in this subsection (d) are sold or leased to a contractor or subcontractor for use in, or experimental work in connection with, the manufacturing processes for or on behalf of the atomic energy commission or when any of such items are used by a contractor or subcontractor in such experimental work or manufacturing processes.
- (e) There is exempt from this chapter the sale or use of materials and equipment purchased or used for construction or installation, by a contractor, subcontractor or otherwise, of, in or as a part of any electric generating plant or distribution system, any resource recovery facility where steam or electric energy is produced, or any coal gasification plant or distribution system owned or operated by the United States or any agency thereof created by an act of congress, or by the state of Tennessee or any agency or political subdivision thereof, or any authority organized pursuant to the Rural Electric and Community Services Cooperative Act, compiled in title 65, chapter 25. There is also exempt the sale or use of materials and equipment purchased or used for construction or installation by a contractor, subcontractor or otherwise, of, in or as a part of any electric generating plant, including the transmission substation, owned or operated by any person, so long as such person does not now or intend in the future to generate electricity from a plant located in Tennessee or to distribute electricity to consumers in Tennessee.
- (f) There is exempt from the tax imposed by this section or any other provision of this chapter pipes, fittings and materials used to repair or maintain a water utility system owned by a utility district created pursuant to title 7, chapter 82. This exemption applies only to pipes, fittings and materials which become an integral part of the water utility system. This exemption does not apply to any installation of pipes, fittings or materials for any reason other than repair or maintenance of an existing system.
- (g) There is exempt from the tax imposed by this section tangible personal property that:
- (1) Is installed by a dealer in manufactured homes, or furnished to a contractor by the dealer for use in the installation of a manufactured home; and
- (2) Has previously been subjected to the tax imposed by § 67-6-216.
- (h) There is exempt from the tax imposed by this chapter any tangible personal property owned by the United States, or any agency thereof, that is provided to a contractor or subcontractor on a temporary basis for testing pursuant to a contract awarded by the United States, or any agency thereof, to such contractor or subcontractor under the Small Business Innovation Research Program, as that term is defined in 15 U.S.C. § 638(e)(4). The exemption provided by this subsection (h) shall apply only to property that is the subject of the test being performed and property into which the subject of the test must be incorporated before the testing can occur. The exemption provided by this subsection (h) shall not apply to any equipment, machinery or other property used to conduct the test.
- (i) There is exempt from the tax imposed by this chapter any tangible personal property that is provided to a contractor or subcontractor on a temporary basis for testing; provided, that the exemption shall apply only in those instances where the facility at which the testing is undertaken is owned by the United States or any agency of the United States. The exemption provided by this subsection (i) shall apply only to the property that is the subject of the test being performed and property into which the subject of the test must be incorporated before the testing can occur. Under no circumstances shall the exemption apply to property used to conduct the test or to property consumed or destroyed during the test. For this purpose, the term "testing" shall be limited to diagnostic, analytical and scientific testing in a controlled environment, dedicated to testing for the purpose of providing information and findings supportive of the aerodynamic, hypersonic, aeropropulsion, space, missile, aircraft and aerospace technologies and industries.
Acts 1949, ch. 245, § 1; C. Supp. 1950, § 1248.52 (Williams, § 1328.24); Acts 1955, ch. 242, § 7; 1957, ch. 166, § 1; 1963, ch. 38, § 6; 1963, ch. 174, § 1; 1978, ch. 536, § 1; 1978, ch. 601, § 1; 1980, ch. 563, § 1; 1980, ch. 812, § 1; T.C.A. (orig. ed.), § 67-3004(a)-(e); Acts 1985, ch. 475, § 1; 1989, ch. 409, § 1; 1990, ch. 646, § 1; 1993, ch. 477, § 1; 1996, ch. 722, § 1; 1996, ch. 739, § 2; 1996, ch. 1006, § 1; 1997, ch. 194, § 4; 2003, ch. 357, § 28; 2004, ch. 725, § 1; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2005, ch. 371, § 1; 2007, ch. 602, §§ 51, 53, 143; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2021, ch. 429, § 1.
Notes of Decisions
Cited in 9
cases, 1987–2005 · leading case: Wylie Steel Fabricators, Inc. v. Johnson
Wylie Steel Fabricators, Inc. v. Johnson (2005)
“Tenn.Code Ann. § 67-6-209 (2003). On appeal, Wylie Steel contends that its transfer of the raw materials to the individual churches in this case falls within the definition of a “sale” under section 67-6-102(a)(27)(A) of the Tennessee Code.”
Sodexho Management, Inc. v. Johnson (2004)
“1 Tenn.Code Ann. § 67-6-209(b). The use tax was assessed against Sodexho — not the university — due to Sodexho’s *177 use of the university’s personal property in the performance of its food services.”
Security Fire Protection Co. v. Huddleston (2003)
“§§ 67-6-203, 210 or the contractor’s use statute codified at Tenn.Code Ann. § 67-6-209. The threshold determination here is whether Security Fire’s withdrawal from inventory of imported materials for fabrication into component parts was a taxable event for use tax purposes.”
Hearthstone, Inc. v. Moyers (1991)
“Tenn.Code Ann. § 67-6-209 (emphasis added).”
Sodexho Management, Inc. v. Ruth E. Johnson (2004)
“1 Tenn. Code Ann. § 67-6-209 (b). The use tax was assessed against Sodexho – not the university – due to Sodexho’s use of the university’s personal property in the performance of its food services.”
Lockheed Martin Energy Systems, Inc. v. Johnson (2002)
“, the use by Energy Systems of tangible personal property owned by the United States government was for the private use and benefit of said taxpayers, and therefore, subject to Tennessee Use Tax).”
Security Fire Protection v. Joe B. Huddleston (2003)
“ssee of imported materials constitutes use under the use taxation statutes; 2) if so, whether such materials, which Security Fire subsequently transported to its out-of-state job sites, are exempt from use taxes under the imported-for-export or manufactured-for-export…”
Edwin B. Raskin Co. v. Johnson (1998)
“Tenn. Code Ann. § 67-6-209 (b) provides: Where a contractor or subcontractor hereinafter defined as a dealer uses tangible personal property in the performance of the contract, or to fulfill contract or subcontract obligations, whether the title to such property be in the…”
United States v. Hawkins County (1987)
“This subsection shall not affect sales and use taxes imposed on users of federal property by § 67-6-209. Relying upon § 67-5-203(c), the property assessor for Hawkins County, Tennessee assessed a “use” tax of $8,125,239.”
— Tenn. Code Ann. § 67-6-209(b) — 3 cases
Sodexho Management, Inc. v. Johnson (2004)
“1 Tenn.Code Ann. § 67-6-209(b). The use tax was assessed against Sodexho — not the university — due to Sodexho’s *177 use of the university’s personal property in the performance of its food services.”
Wylie Steel Fabricators, Inc. v. Johnson (2005)
“Tenn.Code Ann. § 67-6-209 (2003). On appeal, Wylie Steel contends that its transfer of the raw materials to the individual churches in this case falls within the definition of a “sale” under section 67-6-102(a)(27)(A) of the Tennessee Code.”
Lockheed Martin Energy Systems, Inc. v. Johnson (2002)
“, the use by Energy Systems of tangible personal property owned by the United States government was for the private use and benefit of said taxpayers, and therefore, subject to Tennessee Use Tax).”
— Tenn. Code Ann. § 67-6-209(c) — 2 cases
Wylie Steel Fabricators, Inc. v. Johnson (2005)
“Tenn.Code Ann. § 67-6-209 (2003). On appeal, Wylie Steel contends that its transfer of the raw materials to the individual churches in this case falls within the definition of a “sale” under section 67-6-102(a)(27)(A) of the Tennessee Code.”
Lockheed Martin Energy Systems, Inc. v. Johnson (2002)
“, the use by Energy Systems of tangible personal property owned by the United States government was for the private use and benefit of said taxpayers, and therefore, subject to Tennessee Use Tax).”
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