2018 Tennessee Code
Title 47 - Commercial Instruments and Transactions
Chapter 50 - Miscellaneous Provisions
§ 47-50-115. Reimbursement of federal excise taxes.

(a) When a contract calls for one party to reimburse the other party for the federal manufacturer's excise tax levied by Part III of Subchapter A of Chapter 32 of the Internal Revenue Code, whether as a separate item or as part of the price, there shall exist for the party making the reimbursement a contractual right relating to the timing of that payment which can be invoked at the option of such party as provided in subsection (b).

(b) The party making the reimbursement shall not be required to tender payment for such taxes more than one business day prior to the time the other party is required to remit such taxes to the internal revenue service.

(c) Should a party choose to exercise the option provided in subsections (a) and (b), the other party may demand security for the payment of the taxes in proportion to the amount such taxes represent compared to the security demanded on the contract as a whole. Such party, however, may not change the other payment terms of the contract without a valid business reason other than to exercise the option as provided in subsections (a) and (b), except to require the payment of such taxes under such option to be made by electronic transfer of funds.

(d) The party exercising the option set out in subsections (a) and (b) shall notify the other party in writing of the intent to exercise such payment option and the effective date of the exercise which shall be no earlier than thirty (30) days after the notice of intent is received or the beginning of the next federal tax quarter, whichever is later.

(e) This section applies to all contracts in effect on July 1, 1994, which have no expiration date and are continuing contracts, and to all other contracts entered into or renewed after July 1, 1994. Any contract in force and effect July 1, 1994, which, by its own terms, will terminate on a date subsequent thereto, shall be governed by the law as it existed prior to July 1, 1994.

(f) The option set out in subsections (a) and (b) shall not be construed to impair the obligation arising under any contract executed prior to July 1, 1994. Should the option set out in subsections (a) and (b) be exercised, it shall not relieve such party of the obligation to make the reimbursement as provided for in the contract but shall affect only the timing of when that reimbursement must be tendered.

(g) All laws and parts of laws in conflict with this section are repealed.