Tennessee Enacts Exemption for Materials Used to Construct Warehouse or Distribution Facilities

Tennessee has enacted a sales and use tax exemption on qualified building materials used in the construction, expansion, or renovation of one or more qualified, new, or expanded warehouse or distribution facilities, effective May 24, 2019. In order the qualify for the exemption, the taxpayer or a lessor, or both must make a capital investment of at least one billion dollars in the construction or renovation of such facilities and related facilities at the same location within the qualified capital investment period. Per the legislation, “qualified building materials” means tangible personal property purchased between July 1, 2019 and December 31, 2026 that becomes part of the real property comprising the facility. “Qualified capital investment period” means a period beginning on or after January 1, 2019 and ending no later than December 31, 2026. A taxpayer seeking the exemption must submit an application to the commissioner of revenue prior to October 1, 2019, describing the investment to be made during the qualified capital investment period. If approved, an exemption certificate will be issued to be used to claim exemption on the purchase of qualified materials. If any requirements are not met, the taxpayer is liable for any sales or use tax, penalty, or interest that would otherwise have been due. The amount of any tax due must be assessed within 3 years of December 31 of the final year of the investment period, unless extended. (Ch. 503 (H.B. 1461), Laws 2019)

Posted on July 16, 2019