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2020 Tennessee Code
Title 67 - Taxes and Licenses
Chapter 6 - Sales and Use Taxes
Part 2 - Taxes Imposed
§ 67-6-235. Credits for Qualified Disaster Restoration Projects
Universal Citation: TN Code § 67-6-235 (2020)
- A taxpayer who engages in a qualified disaster restoration project in this state shall be eligible for a credit of all state sales or use taxes paid to the state of Tennessee, except tax at the rate of one-half percent (0.5%), on the sales or use of qualified tangible personal property.
- For purposes of this section:
- “Qualified disaster restoration project” means a project undertaken in connection with the restoration of real or tangible personal property located within a declared federal disaster area that suffered damages as a result of that disaster; provided, that such project involves a minimum investment of fifty million dollars ($50,000,000) or more for the restoration of such property. Such minimum investment may include, but is not limited to, the cost of constructing or refurbishing a building and the cost of building materials, labor, equipment, furniture, fixtures, computer software, and other tangible personal property within the building, but shall not include land or inventory; and
- “Qualified tangible personal property” means building materials, machinery, equipment, computer software, furniture and fixtures used exclusively to replace or restore real or tangible personal property that suffered damages as a result of the disaster covered by this section and purchased or leased prior to substantial completion of the qualified disaster restoration project. “Qualified tangible personal property” does not include any payments with respect to leases of qualifying tangible personal property that extend beyond substantial completion of the disaster restoration project.
- The taxpayer shall not be permitted to take advantage of any additional sales or use tax credits, exemptions, or reduced rates that would otherwise be available under this chapter as a result of the same purchases or minimum investment.
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- A taxpayer seeking this credit shall first submit to the commissioner an application to qualify its project as a qualified disaster restoration project, together with a plan describing the investment to be made. In the case of a leased building, the lessor shall also file an application and plan, if any taxes paid by the lessor are to be claimed as part of the credit provided in this section. The application and plan shall be submitted on forms prescribed by the commissioner and shall demonstrate that the requirements of the law will be met.
- After approval of the application and plan, the commissioner shall issue a letter to the taxpayer stating that the taxpayer has tentatively met the requirements for the credit provided in this section.
- In order to receive the credit, the taxpayer shall submit a claim for credit, along with documentation as required by the commissioner showing that Tennessee sales or use taxes have been paid to the state on qualified tangible personal property. The taxpayer's claim for credit of sales or use taxes paid to Tennessee may include such taxes paid by the taxpayer, lessor, in the case of a leased building, contractors, and subcontractors on sales or use of qualified tangible personal property. Documentation verifying that the minimum investment requirements have been met shall include, but are not limited to, employment records, invoices, bills of lading, lease agreements, contracts, and all other pertinent records and schedules as required by the commissioner.
- The commissioner shall review the claim for credit and notify the taxpayer of the approved tax credit amount and provide direction for taking the credit. The taxpayer may not take the credit until the commissioner has notified the taxpayer of the amount approved and provided direction to the taxpayer on the proper methodology for taking the credit. The credit may only be taken by the taxpayer engaged in the qualified disaster recovery project.
- If the minimum investment requirement or other terms of this section are not met, the taxpayer shall be subject to assessment for any sales or use tax, penalty, or interest that would otherwise have been due and for which credit was taken. The statute of limitations shall not begin to run on these assessments until December 31 of the year in which the project is substantially completed.
- Credits under this section shall not reduce the taxes earmarked and allocated to education pursuant to § 67-6-103(c).
- Nothing in this section shall require that the taxpayer establish its commercial domicile in this state in order to receive the credit.
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