Avalara Taxrates > Blog > Sales Tax News > Drones May Not Be Legal But They Are Exempt in Tennessee - Avalara

Drones May Not Be Legal But They Are Exempt in Tennessee


 The future?

Skies full of unmanned aircraft systems (UAS) seem like the backdrop from a futuristic movie. Drones surveil citizens, deliver goods, and seamlessly integrate into countless aspects of daily life. Fiction? Maybe not.

Entrepreneurs and inventive types have been working with drones for years, as has the government. Creative small businesses use drones to expand the reach of cameras and root out feral pigs from Louisiana fields. But the Federal Aviation Administration (FAA) in 2007 clarified its policy on unmanned aircraft systems, which is stated on “Busting Myths about the FAA and Unmanned Aircraft” (updated March 7, 2014):

“You may not fly a UAS for commercial purposes by claiming that you’re operating according to the Model Aircraft guidelines (below 400 feet, 3 miles from an airport, away from populated areas). Commercial operations are only authorized on a case-by-case basis. A commercial flight requires a certified aircraft, a licensed pilot and operating approval. To date, only one operation has met these criteria….”

The FAA has been “working on rules for drones” in earnest since 2009. It says it’s a myth that the agency doesn’t control airspace below 400 feet, insisting that it “is responsible for the safety of U.S. airspace from the ground up.” It enforces its safety responsibilities with verbal warnings, written notices, and orders to stop. But according to the Wall Street Journal, “limited resources and legal complications have led to scattershot enforcement by the agency, emboldening even more drone operators.”

The situation above ground has been likened to the Wild West, and many worry of a modern equivalent to the Wild West’s dangers. To whit: the near collision of a drone with a commercial jet this spring.

In truth, there are drone operators who “aren’t shy about flouting the current rules” and the FAA is not at this time making them cease and desist. Indeed, it may lack the authority to do so. “A ruling by an administrative law judge [in March] held that the Federal Aviation Administration lacks clear-cut authority to ban the commercial use of drones in the continental U.S.” (Wall Street Journal).

Furthermore, hobbyists may use UAS under current FAA regulations, and the FAA has a rather broad definition of hobbyist. For example, the head of the FAA’s unmanned-aircraft office “said officials generally consider farmers who use drones to monitor crops as hobbyists.” He also said that the FAA may soon permit drone use in “farming, filmmaking and inspections of power lines and certain parts of oil and gas plants”—uses not currently allowed.

The FAA is seeking the right balance, and it needs to. In 2012, Congress mandated the FAA to “come up with a plan for ‘safe integration’ of UAS by September 30, 2015. On Monday of this week, the agency announced “that it is considering a petition from seven film companies for an exemption to the current drone ban.”

Preparing for the future: Tennessee

The Tennessee Department of Revenue has stated that it “considers unmanned aircraft systems used for certain agricultural purposes to be items farmers and others who hold agricultural exemption certificates can buy tax-free.”

It continues: “The Department considers unmanned aircraft systems (UAS) used in sowing, planning, growing, managing, or harvesting farm products and nursery stock to be an appliance that qualifies for the agricultural exemption.” Support equipment such as data and photographic recorder lings and telemetry and navigation equipment such as transceivers and antenna is also exempt.

Buyers must provide sellers with a valid agricultural exemption certificate in order to purchase eligible items free from Tennessee sales tax.

How are your preparing for the future? Learn how an automated sales tax solution can help your business stay compliant in the face of changing rates, rules and regulations.

photo credit: Xray40000 via photopin cc


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.