Tenn. Comp. R. & Regs. 1320-05-01-.32 - LEASE OR RENTAL
(1) The gross
receipts or gross proceeds derived from or amount agreed to be paid for the
lease or rental, within Tennessee, of all kinds of types of tangible personal
property are subject to the Sales or Use Tax. The tax shall be computed on the
gross receipts, gross proceeds, or rental payable without any deduction
whatsoever for expense incident to the conduct of business.
(2) The terms of the contract under which
such tangible personal property is leased or rented shall be the basis for
computing the tax. The tax is to be computed on a billing basis, either on the
lump sum at the time of execution, or on a monthly or periodical basis as
provided in the contract. The Sales Tax shall apply to all leases of tangible
personal property delivered to a lessee or rentee in this State, regardless of
where the property will be taken or used by the lessee or rentee, whether
within or without the State of Tennessee.
(3) Tangible personal property sold to be
used exclusively for renting or leasing may be sold upon a resale
certificate.
(4) Royalties paid, or
agreed to be paid, either on a lump sum or production basis, for tangible
personal property used in this State are rentals subject to the Sales or Use
Tax.
(5) If the owner of the
property maintains continuous supervision over the personal property being
rented or leased, and furnishes an operator or crew to operate such property,
he is rendering a service, and the same is not subject to Sales or Use Tax on
the other hand, if the owner does not furnish the crew or operator, but merely
rents the property, and the lessee operates it himself for a stated
consideration or price, either by the day or week or month, in such case, the
Sales or Use Tax would apply as the lessee has the possession, use and control
of the property.
(6) The tax on
leases or rentals are due from the lessee even though the lessor may be a tax
exempt entity. Where it is contemplated that a person shall have the right to
use tangible personal property only on the premises of the owner, and such
premises are occupied by the owner in the conduct of his business, the
transaction shall be regarded as a license to use tangible personal property,
and not as a rental thereof, and the owner shall pay any applicable Sales or
Use Tax on the purchase price thereof. The transaction shall not be regarded as
a license to use if the premises are occupied by the lessee or the property is
removed from the premises of the lessor.
Notes
Authority: T.C.A. ยงยง 67-1-102, 67-6-204 and 67-6-402.
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