Rules & Regulations of the State of Tennessee
Title 1320 - Revenue
Subtitle 1320-05 - Sales and Use Tax Division
Chapter 1320-05-01 - State Sales and Use Tax Rules
Section 1320-05-01-.102 - ELECTRIC GENERATING PLANTS AND TRANSMISSION SYSTEMS

(1) Tangible personal property which actually becomes a component part of an electric generating plant or distribution system owned or operated by the United States or any of its agencies, by the State of Tennessee, or any of its political subdivisions, or any Electric Membership Corporation or Electric Cooperative Organized pursuant to the Tennessee Law, is exempt from the Sales or Use Tax. This exemption applies without regard to who purchases the tangible personal property, and without regard to the form of any contract involved for the installation of the property as a part of such a system. The exemption provided for herein does not apply to any tangible personal property as a part of such a system. The exemption provided for herein does not apply to any tangible personal property or taxable service which is used in the process of installing the exempt property, when such property does not become a component part of the electric generating plant or distribution system.

(2) Contractors and sub-contractors purchasing tangible personal property to be use as a component part of an electric generating plant or distribution system may furnish their supplier an exemption certificate for each purchase in lieu of the Sales or Use Tax on such sales. Dealers making such sales shall keep such certificates as part of their records. Any dealer who has made any sales which would otherwise be exempt because of this rule and regulation, but who fails to obtain an appropriate exemption certificate at the time of making the sale, shall nevertheless be liable for the payment of any Sales or Use Tax which would otherwise be due on such a transaction.