Tenn. Comp. R. & Regs. 1320-05-01-.15 - ENERGY FUEL AND WATER
(1) All energy
producing fuels such as coal, coke, electricity, natural or petroleum gases,
fuel oil, and other combustibles, and water except as indicated in paragraph
(3) of this rule, are subject to the Sales and Use Tax. In the event the
purchaser does not pay the applicable Sales or Use Tax to the vendor, he must
report the purchases, and pay the tax due thereon directly to the
department.
(2) A manufacturer
whose principal business at a specified location is fabricating or processing
tangible personal property for resale and for ultimate use or consumption off
of his premises may apply to the Commissioner and be authorized to purchase
energy fuel and water for use at that location at such reduced rate as may be
authorized by law. Manufacturers authorized to purchase energy fuels and water
at the reduced tax rate shall furnish a certified or photostatic copy of the
authorization to the vendors of any energy fuel or water being claimed at the
reduced rate of tax, and pay the tax to the vendor if the vendor is qualified
to collect the applicable Sales or Use Tax.
(3) Manufacturers who qualify for energy fuel
or water at the reduced rate may apply for and be granted authority to purchase
those energy fuels or water which are separately metered or shown to be solely
used in a manner coming into direct contact with or as a component part of an
article being fabricated or processed for sale without the payment of any sales
or use tax. Manufacturers authorized to purchase and use energy producing fuels
or water shall furnish a certified copy of the authorization given by the
Commissioner enumerating what energy fuels or water the manufacturer may
purchase without paying sales or use tax to the vendor and shall pay direct to
the Commissioner the tax on those energy fuels or water upon which no tax has
been paid to the vendor and which do not come into direct contact with or
become a component part of an article being fabricated or produced for
sale.
(4) Manufacturers claiming
the benefits of this rule must submit applications for the reduced rate or
complete exemption for each place engaged in manufacturing or processing
tangible personal property for sale. Energy fuel and water used by
manufacturers in other places where business may be conducted and in those
places for which a specific authorization has not been granted by the
Commissioner are subject to the full rate of tax.
(5) The Commissioner may from time to time
require a manufacturer to furnish additional or current information concerning
the right of one who has been authorized to either purchase and use energy fuel
or water at the reduced rate or to purchase and use energy fuel or water
without payment of tax. Upon notice from the Commissioner, the manufacturer
shall immediately furnish such information as the Commissioner may deem
necessary to ascertain whether the conditions necessary for the authorization
have changed, and whether the manufacturer is or has been entitled to the
reduced rate of tax or a complete exemption on part of the energy fuel or
water. Failure to submit any necessary information to the Commissioner to make
this determination shall be a basis for revoking any authorization given to the
manufacturer.
(6) Vendors selling
energy fuels or water to a manufacturer claiming a partial or complete
examination from paying the tax on energy fuels or water shall have appropriate
copies of the authorizations granted by the Commissioner to the manufacturer in
their files as evidence to show why the full tax rate has not been collected
and paid to the department. Vendors shall be liable for any tax due from
manufacturers where proper evidence is not obtained from the
manufacturer.
(7) Vendors shall
report the total sales of energy fuel and water sold to manufacturers with any
other sales of energy fuels, water and any other tangible personal property and
taxable services. The total amount of sales of energy fuels and water sold to
manufacturers furnishing certified copies of the appropriate authorizations
shall be reported on the forms and in the manner provided by the Commissioner.
Manufacturers purchasing energy fuel and water without paying the appropriate
tax to the vendor, when any is due, shall include and indicate the amount of
purchases of energy fuel and water on their returns, and pay the appropriate
tax direct to the department.
(8)
Manufacturers and processors authorized to buy any energy fuel or water without
paying any tax to the vendor shall maintain accurate records showing what
energy fuel or water has been used in a manner so as to be to totally exempt
from tax and the total purchases of such energy fuel or water. In cases of
electricity, natural or artificial gas, water, and any other item that is
metered, accurate meter readings showing readings of the exempt portion and the
total purchases of energy fuel and water at least once each month, preferably
at the time the readings are made by or for the vendor for billing purposes,
shall be maintained by the manufacturer or processor.
Notes
Authority: T.C.A. ยงยง 67-1-102 and 67-6-402.
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