Laboratory Research:

State of Tennessee Exempts DOE's Spallation Neutron Source Project From Sales and Use Taxes

RCED-00-99R: Published: Mar 24, 2000. Publicly Released: Apr 5, 2000.

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Pursuant to a legislative requirement, GAO provided information on the tax expenses associated with building the Department of Energy's Spallation Neutron Source (SNS) project, focusing on whether it would be less expensive to build the project at any of the participating national laboratories.

GAO noted that: (1) the sales and use tax costs to build the SNS Project at the Oak Ridge National Laboratory, using Lockheed Martin or University of Tennessee-Battelle (UT-Battelle) would be more than if the project were built at Brookhaven National Laboratory, where the current managing contractor and subcontractors incur virtually no sales and use taxes; (2) this is because New York has tax exemptions that Brookhaven's contractor (a tax-exempt, not-for-profit organization) and its for-profit subcontractors can use; (3) in contrast, such exemptions were not available to UT-Battelle because Tennessee did not have similar tax exemptions; (4) thus, Lockheed Martin, a for-profit organization, and UT-Battelle, a not-for-profit, limited liability corporation that is not recognized by Tennessee as tax exempt, would pay both sales and use taxes; (5) the state of Tennessee has since taken action to exempt the SNS from Tennessee sales and use taxes; (6) the Governor of Tennessee signed into law Senate Bill No. 2001 that, among other things, exempts SNS from all sales and use taxes imposed by the state; and (7) because of this new legislation, it would now cost no more, from a sales and use tax standpoint, to construct the SNS Project in Tennessee than at any of the four other collaborating laboratories.

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