2023 Tennessee Code › Title 67 - TAXES AND LICENSES (§§ 67-1-101 — 67-10-107) › Chapter 6 - SALES AND USE TAXES (§§ 67-6-101 — 67-6-907) › Part 2 - TAXES IMPOSED (§§ 67-6-201 — 67-6-235) › Section 67-6-206 - Industrial machinery and raw materials - Exemptions

(a)
After June 30, 1983, no tax is due with respect to industrial machinery.
(b)
(1)
Tax at the rate of one percent (1%) is imposed with respect to water when sold to or used by manufacturers. Tax at the rate of one and one-half percent (1.5%) shall be imposed with respect to gas, electricity, fuel oil, coal and other energy fuels when sold to or used by manufacturers.
(2)
For the purpose of this subsection (b), "manufacturer" means one whose principal business is fabricating or processing tangible personal property for resale.
(3)
The substances shall be exempt entirely from the taxes imposed by this chapter whenever it may be established to the satisfaction of the commissioner, by separate metering or otherwise, that they are exclusively used directly in the manufacturing process, coming into direct contact with the article being fabricated or processed by the manufacturer, and being expended in the course of the contact. Whenever the commissioner determines that the use of the substances by a manufacturer meets the test, the commissioner shall issue a certificate evidencing the entitlement of the manufacturer to the exemption. A copy of the certificate issued by the commissioner or a fully completed Streamlined Sales Tax certificate of exemption, which must include the manufacturer's exemption authorization number included on the certificate issued by the commissioner, shall be furnished by the manufacturer to the manufacturer's supplier of the exempt substances. The certificate may be revoked by the commissioner at any time upon a finding that the conditions precedent to the exemption no longer exist.
(4)
Any water or energy fuel used by a manufacturer in fabricating or processing tangible personal property for resale shall be exempt entirely from the taxes imposed by this chapter when the water or energy fuel are produced or extracted directly by the manufacturer from facilities owned by the manufacturer or in the public domain.
(5)
Notwithstanding the requirement of direct contact, there shall be exempt entirely from the tax imposed by this chapter electricity used to generate radiant heat for production of heat-treated glass when sold to or used by manufacturers; provided, that the manufacturer has applied for and received a certificate of exemption as required by this section. The person shall furnish to that person's supplier of the substance a copy of the certificate or a fully completed Streamlined Sales Tax certificate of exemption, which must include the manufacturer's exemption authorization number included on the certificate issued by the commissioner, to evidence qualification for the exemption.
(6)
(A)
Notwithstanding subdivisions (b)(1)-(5), the reduced rates provided by subdivision (b)(1) shall apply to the use of such substances by a person engaged at a location in packaging automotive aftermarket products manufactured at other locations by the same person or by a corporation affiliated with the manufacturing corporation, such that:
(i)
Either corporation directly owns or controls one hundred percent (100%) of the capital stock of the other corporation; or
(ii)
One hundred percent (100%) of the capital stock of both corporations is directly owned or controlled by a common parent.
(B)
"Packaging", as used in this subdivision (b)(6), refers only to the fabrication and/or installation of that packaging that will accompany the automotive aftermarket product when sold at retail. The reduced rates shall apply only to such substances used in the packaging process. Such use must be established to the satisfaction of the commissioner by separate metering or otherwise. To qualify for the reduced rate under this subdivision (b)(6), a person shall apply for and receive a certificate of qualification for the reduced rate from the commissioner. The person shall furnish to that person's supplier of the substances a copy of the certificate or a fully completed Streamlined Sales Tax certificate of exemption, which must include the exemption authorization number included on the certificate issued by the commissioner, to evidence qualification for the reduced rate.
(7)
Notwithstanding the requirement of direct contact, natural gas used to generate heat for the production of primary aluminum, aluminum sheet and foil, and aluminum can sheet products when sold to or used by manufacturers shall be exempt entirely from the tax imposed by this chapter; provided, that the manufacturer applies for and receives a certificate of exemption as required by this section. Nothing shall be inferred from this subdivision (b)(7) as to the law in effect prior to this change.
(8)
Notwithstanding subdivision (b)(2), the term "manufacturer" does not include any person whose principal business is the preparation of food for immediate retail sale.
(c)
(1)
Tax at the rate of one and one-half percent (1.5%) shall be imposed with respect to electricity when sold to or used by a qualified data center.
(2)
No tax is imposed with respect to cooling equipment or backup power infrastructure when sold to or used by a qualified data center.
(3)
As used in subdivision (c)(2):
(A)
"Backup power infrastructure" means backup power generation, battery systems, and related infrastructure used primarily for and necessary to the operations of a qualified data center; and
(B)
"Cooling equipment" means cooling systems, cooling towers, and other temperature control infrastructure used primarily for and necessary to the operations of a qualified data center.
(d)
Any qualified data center that applies for job tax credits under §
67-4-2109
must certify on its business plan that it has not, within the previous twelve (12) months, been found to be in violation of the Worker Adjustment and Retraining Notification (WARN) Act (
29 U.S.C. §§ 2101-2109
), the Fair Labor Standards Act of 1938 (
29 U.S.C. § 201
et seq.), or federal immigration laws. Any qualified data center that fails to provide the required certification shall not qualify for job tax credits under §
67-4-2109
.
Amended by 2016 Tenn. Acts, ch. 1001, s 2, eff. 7/1/2016.
Amended by 2016 Tenn. Acts, ch. 1001, s 3, eff. 7/1/2016.
Acts 1947, ch. 3, § 3; C. Supp. 1950, § 1248.52 (Williams, § 1328.24); Acts 1955, ch. 51, §§ 7, 8; 1955, ch. 242, § 6; 1959, ch. 15, § 2; 1963, ch. 38, §§ 3, 5; 1963, ch. 172, § 3; 1965, ch. 335, § 2; 1971, ch. 78, § 1; 1971, ch. 117, § 2; 1972, ch. 653, § 1; 1973, ch. 239, § 1; 1974, ch. 675, § 1; 1975, ch. 316, § 1; 1976, ch. 466, §§ 1, 3; 1980, ch. 871, § 1; 1982, ch. 610, § 1; 1982, ch. 646, § 1; 1983, ch. 378, § 1; 1983, ch. 402, § 1; T.C.A. (orig. ed.), § 67-3003(g); Acts 1993, ch. 430, § 1; 1995, ch. 185, § 2; 1998, ch. 767, § 1; 2003 , ch. 357, § 26; 2004, ch. 959, §§ 7, 68; 2005, ch. 311, §§ 1, 2; 2005, ch. 499, § 6; 2006, ch. 1019, § 35; 2007 , ch. 602, §§ 37, 51, 76 - 78, 142, 187; 2009 , ch. 530, §§ 35, 39; 2011 , ch. 72, §§ 1, 5; 2013 , ch. 480, § 1; 2015 , ch. 273, § 3.