Dyed diesel purchased by timber harvesters holding an agricultural exemption certificate can be purchased exempt from sales tax. To be exempt, dyed diesel fuel must be used for “agricultural purposes,” which includes logging equipment used in cutting and harvesting timber.
Dyed diesel may not be purchased tax exempt if it is used in vehicles or equipment that are operated on public highways in this state.
Reference: Tenn. Code Ann. §§ 67-6-102 and 67-6-207.