The Tennessee Department of Revenue issued Revenue Ruling No. 08-19, in response to a taxpayer’s inquiry as to whether or not leases or rentals of crates used for transporting packaged food products are subject to sales and use tax. The crates did not qualify for the packaging materials exemption because they only satisfied one out of three requirements stated under Tenn. Code Ann ยง67-6-102(34)(E)(ii). The crates, considered containers, did not meet the second requirement: used for “packaging” tangible personal property (“TPP”). To be considered “packaging” the item in question should be used to enclose, wrap, or otherwise fully contain TPP. In this case, the crates do not enclose, wrap or otherwise fully contain the food products. The crates are lidless trays with two metal bars across the top and handles on two sides. Even if the crates had met this requirement, they would have still failed to satisfy the third requirement: requiring either 1) that the TPP be sold directly to the consumer in the packaging, or 2) that the use of the packaging be incidental to the sale of the TPP for resale. In the taxpayer’s case, the food products were not sold directly to the consumer in the crates (while the retail store sometimes use the crates to display the food products, the consumer never purchases a crate along with the food products) and are not incidental to the sale of the food products for resale. (Revenue Ruling No. 08-19, Tennessee Department of Revenue, February 29, 2008)