Is firewood sold over the counter at a retail store exempt from Tennessee sales tax as residential heating fuel?

Plain-English summary

A retailer sells firewood, wood pellets, and fire logs for residential heating, all as over-the-counter purchases at its stores -- it doesn't deliver to customers. It asked whether these sales qualify for Tennessee's exemption for residential heating fuels.

The Department said no, and didn't even need to decide whether firewood, pellets, and fire logs count as "other energy fuels" in the first place. Tennessee's exemption for "gas, electricity, fuel oil, coal and other energy fuels sold directly to the consumer for residential use" (§ 67-6-334(a)) comes with a specific carve-back: it does not apply to energy fuels sold over the counter at the seller's location (§ 67-6-334(b)(4)). There are narrow exceptions to that carve-back -- bulk propane (100+ pound cylinders) and kerosene sold through tamper-resistant dispensers -- but firewood, wood pellets, and fire logs don't fit either exception. Since every one of the retailer's sales happens over the counter at its own stores with no delivery, the exemption's threshold requirement is never met, and the sales are fully taxable regardless of how "firewood" itself would otherwise be classified.

What this means for you

Firewood, wood pellet, and heating-fuel retailers

Selling a residential heating fuel doesn't automatically make your sale exempt -- HOW you sell it matters just as much as WHAT you sell. Tennessee's residential energy fuel exemption is built around delivered fuel, not counter sales; if your product only moves over the counter at your store (no delivery), you likely fall outside the exemption regardless of the product's classification as fuel, unless you fit one of the narrow bulk-propane or kerosene-dispenser exceptions.

Accountants and tax professionals

Note the Department's approach here: it skipped the harder question (is firewood an "other energy fuel"?) because the sale independently failed the "not sold over the counter" threshold requirement -- a useful reminder to check every element of a multi-part exemption, since failing any one is dispositive.

Common questions

Q: Is firewood exempt from Tennessee sales tax as a heating fuel?
A: Not when sold over the counter at the seller's retail location -- Tennessee's residential energy fuel exemption specifically excludes over-the-counter sales, with only narrow exceptions for bulk propane and certain kerosene dispensers that don't apply to firewood.

Q: Would the answer change if the retailer delivered the firewood to customers' homes?
A: This ruling doesn't decide that -- it resolved the question purely on the over-the-counter carve-back, without reaching whether firewood otherwise qualifies as an "energy fuel." A delivered-fuel scenario would need separate analysis.

Q: Are there any over-the-counter heating fuel sales that stay exempt?
A: Yes, two narrow ones: propane sold over the counter in cylinders of 100+ pounds, and kerosene sold through dispensers designed to prevent filling a vehicle's fuel tank directly.

Q: Can another retailer rely on this ruling?
A: No. A Tennessee letter ruling binds the Department only as to the specific taxpayer and facts it was issued to, and it can be revoked or modified by the Commissioner. Confirm your own sales and delivery model with a tax professional.

Citations and references

Tennessee statutes (Tenn. Code Ann.):

• § 67-6-334(a) (Supp. 2010) (exemption for gas, electricity, fuel oil, coal, and other energy fuels sold directly to the consumer for residential use)
• § 67-6-334(b)(4) (Supp. 2010) (exemption does not apply to energy fuels sold over the counter at the seller's location; narrow exceptions for bulk propane and certain kerosene dispensers)
• § 67-6-102(79), § 67-6-102(92)(A) (Supp. 2010) ("retail sale," "tangible personal property")
• § 67-6-101 et seq. (Retailers' Sales Tax Act)

Source

• Landing page: https://www.tn.gov/revenue/tax-resources/legal-resources/tax-rulings.html
• Original PDF: https://www.tn.gov/content/dam/tn/revenue/documents/rulings/sales/11-37.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING # 11-37
WARNING
Letter rulings are binding on the Department only with respect to the individual taxpayer
being addressed in the ruling. This presentation of the ruling in a redacted form is
informational only. Rulings are made in response to particular facts presented and are not
intended necessarily as statements of Department policy.

SUBJECT
The applicability of the Tennessee sales and use tax to the sale of firewood, wood pellets, and
fire logs.
SCOPE
This letter ruling is an interpretation and application of the tax law as it relates to a specific set of
existing facts furnished to the Department by the taxpayer. The rulings herein are binding upon
the Department, and are applicable only to the individual taxpayer being addressed.
This letter ruling may be revoked or modified by the Commissioner at any time. Such revocation
or modification shall be effective retroactively unless the following conditions are met, in which
case the revocation shall be prospective only:
(A) The taxpayer must not have misstated or omitted material facts involved in
the transaction;
(B) Facts that develop later must not be materially different from the facts upon
which the ruling was based;
(C) The applicable law must not have been changed or amended;
(D) The ruling must have been issued originally with respect to a prospective or
proposed transaction; and
(E) The taxpayer directly involved must have acted in good faith in relying upon
the ruling; and a retroactive revocation of the ruling must inure to the taxpayer’s
detriment.
FACTS
[TAXPAYER] makes retail sales of firewood, wood pellets, and fire logs for use as a residential
heating fuel. All sales take place at the Taxpayer’s retail stores; the Taxpayer does not make
deliveries of firewood, wood pellets, and fire logs to its customers.

QUESTION
Are the Taxpayer’s sales of firewood, wood pellets, and fire logs exempt for purposes of the
Tennessee sales and use tax pursuant to TENN. CODE ANN. § 67-6-334(a) (Supp. 2010) when sold
directly to the consumer for residential use?
RULING
No. The Taxpayer’s sales of firewood, wood pellets, and fire logs are not exempt for purposes of
the Tennessee sales and use tax pursuant to TENN. CODE ANN. § 67-6-334(a) (Supp. 2010),
because such sales take place over the counter at the location of the Taxpayer.
ANALYSIS
Under the Retailers’ Sales Tax Act, TENN. CODE ANN. § 67-6-101 et seq., the retail sale of
tangible personal property in Tennessee is generally subject to the sales and use tax.1 Because
firewood, wood pellets, and fire logs are tangible personal property, the retail sale of such items
will be subject to the Tennessee sales and use tax unless an exemption from taxation applies.
TENN. CODE ANN. § 67-6-334(a) (Supp. 2010) exempts from the sales and use tax “gas,
electricity, fuel oil, coal and other energy fuels sold directly to the consumer for residential use.”
However, TENN. CODE ANN. § 67-6-334(b)(4) provides that the exemption does not apply to
“energy fuels sold over the counter at the location of the seller,” except in certain instances
involving the sale of propane or kerosene.2
Thus, for the exemption to apply to the Taxpayer’s sales of firewood, wood pellets, and fire logs,
such items must be properly characterized as “other energy fuels” that are sold directly to the
consumer for residential use. Additionally, such sales cannot take place over the counter at the
location of the Taxpayer.
Regardless of whether firewood, wood pellets, and fire logs are properly considered “other
energy fuels” sold directly to the consumer for residential use, the Taxpayer’s sales are removed
from the scope of the exemption pursuant to TENN. CODE ANN. § 67-6-334(b)(4), which provides
that the exemption does not apply to “energy fuels sold over the counter at the location of the
seller.” The Taxpayer has indicated that all sales of firewood, wood pellets, and fire logs take
place at its retail locations in Tennessee; the Taxpayer does not make deliveries of firewood,
wood pellets, and fire logs to its customers. Thus, all of the Taxpayer’s sales of firewood, wood
pellets, and fire logs are made over the counter the location of the seller.

1

The term “retail sale” is defined to include “any sale, lease, or rental for any purpose other than for resale,
sublease, or subrent.” TENN. CODE ANN. § 67-6-102(79) (Supp. 2010). “Tangible personal property” is defined in
pertinent part as “personal property that can be seen, weighed, measured, felt, or touched, or that is in any manner
perceptible to the senses.” TENN. CODE ANN. § 67-6-102(92)(A).
2

Over-the-counter sales that qualify for the exemption include propane sold over the counter in cylinders with a
capacity of 100 pounds or more directly to the consumer for residential use and kerosene sold at retail through
dispensers that have been designed and constructed to prevent delivery directly from the dispenser into a vehicle fuel
supply tank.

2

Accordingly, the Taxpayer’s sales of firewood, wood pellets, and fire logs are not exempt for
purposes of the Tennessee sales and use tax pursuant to TENN. CODE ANN. § 67-6-334(a),
because such sales take place over the counter at the location of the Taxpayer.

Kristin Husat
Senior Tax Counsel

APPROVED:

Richard H. Roberts
Commissioner of Revenue

DATE:

7/26/11

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