2021 Tennessee Code
Title 67 - Taxes and Licenses
Chapter 6 - Sales and Use Taxes
Part 9 - Transactions Subject to Sales and Use Taxes
§ 67-6-902. Sourcing — Retail Sales — Lease or Rental of Tangible Personal Property — Lease or Sale of Nontransportation Equipment Vehicles — Retail Sales of Transportation Equipment. [Amended Effective October 1, 2019. See the Compiler's notes.] [Effective on July 1, 2021.]

Universal Citation:

TN Code § 67-6-902 (2021)

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The retail sale, excluding lease or rental, of a product shall be sourced as follows:
1. When the product is received by the purchaser at a business location of the seller, the sale is sourced to that business location;
2. When the product is not received by the purchaser at a business location of the seller, the sale is sourced to the location where receipt by the purchaser, or the purchaser's donee, designated as such by the purchaser, occurs, including the location indicated by instructions for delivery to the purchaser, or donee, known to the seller;
3. When subdivisions (a)(1) and (2) do not apply, the sale is sourced to the location indicated by an address for the purchaser that is available from the business records of the seller that are maintained in the ordinary course of the seller's business when use of this address does not constitute bad faith;
4. When subdivisions (a)(1), (2), and (3) do not apply, the sale is sourced to the location indicated by an address for the purchaser obtained during the consummation of the sale, including the address of a purchaser's payment instrument, if no other address is available, when use of this address does not constitute bad faith;
5. When none of the previous rules of subdivisions (a)(1), (a)(2), (a)(3) or (a)(4) apply, including the circumstance in which the seller is without sufficient information to apply the previous rules, then the location shall be determined by the address from which tangible personal property was shipped, from which the digital product or the computer software delivered electronically was first available for transmission by the seller, or from which the service was provided, disregarding for these purposes any location that merely provided the digital transfer of the product sold; and
6. Notwithstanding subdivisions (a)(1)-(5), when the product is sold from a location in this state and the purchaser instructs the seller to ship or deliver the product to another location within this state, the sale shall be sourced to the seller's location.

1. The lease or rental of tangible personal property, other than property identified in subsection (c) or (d), shall be sourced as follows:
  1. For a lease or rental that requires recurring periodic payments, the first periodic payment is sourced the same as a retail sale in accordance with subsection (a). Periodic payments made subsequent to the first payment are sourced to the primary property location for each period covered by the payment. The primary property location shall be as indicated by an address for the property provided by the lessee that is available to the lessor from its records maintained in the ordinary course of business, when use of this address does not constitute bad faith. The property location shall not be altered by intermittent use at different locations, such as use of business property that accompanies employees on business trips and service calls; and
  2. For a lease or rental that does not require recurring periodic payments, the payment is sourced the same as a retail sale in accordance with subsection (a).
2. Subdivision (b)(1) does not affect the imposition or computation of sales or use tax on leases or rentals based on a lump sum or accelerated basis, or on the acquisition of property for lease.

1. The lease or rental of motor vehicles, trailers, semi-trailers, or aircraft that do not qualify as transportation equipment, as defined in subsection (d), and watercraft with a displacement of under fifty (50) tons, shall be sourced as follows:
  1. For a lease or rental that requires recurring periodic payments, each periodic payment is sourced to the primary property location. The primary property location shall be as indicated by an address for the property provided by the lessee that is available to the lessor from its records maintained in the ordinary course of business, when use of this address does not constitute bad faith. This location shall not be altered by intermittent use at different locations; and
  2. For a lease or rental that does not require recurring periodic payments, the payment is sourced the same as a retail sale in accordance with subsection (a).
2. Subdivision (c)(1) does not affect the imposition or computation of sales or use tax on leases or rentals based on a lump sum or accelerated basis, or on the acquisition of property for lease.

1. The retail sale, including lease or rental, of transportation equipment shall be sourced the same as a retail sale in accordance with subsection (a), notwithstanding the exclusion of lease or rental in subsection (a).
2. For the purpose of this part, “transportation equipment” means any of the following:
  1. Locomotives and railcars that are utilized for the carriage of persons or property in interstate commerce;
  2. Trucks and truck-tractors with a gross vehicle weight rating (GVWR) of ten thousand one pounds (10,001 lbs.) or greater, trailers, semi-trailers, or passenger buses that are:
    1. Registered through the International Registration Plan; and
    2. Operated under authority of a carrier authorized and certificated by the United States department of transportation or another federal authority to engage in the carriage of persons or property in interstate commerce;
  3. Aircraft that are operated by air carriers authorized and certificated by the United States department of transportation or another federal or a foreign authority to engage in the carriage of persons or property in interstate or foreign commerce; or
  4. Containers designed for use on and component parts attached or secured on the items set forth in subdivisions (d)(2)(A)-(C).

1. For the purposes of subsection (a), “receive” and “receipt” mean:
  1. Taking possession of tangible personal property;
  2. Making first use of services; or
  3. Taking possession or making first use of digital products, whichever comes first.
2. “Receive” and “receipt” do not include possession by a shipping company on behalf of the purchaser.

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