Sales Tax State Activity Update - August 2005

Contractors Flying High on Tennessee Exemption

Effective June 7, 2005, Public Chapter 371 creates an exemption from contractor's use tax for any tangible personal property that is provided to a contractor or subcontractor on a temporary basis for the purpose of testing.

The exemption only applies if tests are conducted at a facility owned by the United States or an agency thereof, and does not apply to equipment or other property used to conduct the test.

For purposes of this exemption, the word "testing" is limited to diagnostic, analytical or scientific testing for the purpose of providing information and findings supportive of the aerodynamic, hypersonic, aero propulsion, space, missile, aircraft and aerospace technologies or industries.

(2005 Tennessee Laws Public Chapter 371)

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