Rules & Regulations of the State of Tennessee
Title 1320 - Revenue
Subtitle 1320-05 - Sales and Use Tax Division
Chapter 1320-05-01 - State Sales and Use Tax Rules
Section 1320-05-01-.03 - AUTOMOBILES, MOTOR VEHICLES, TRAILERS, MOTOR VEHICLE TRAILER DEALERS

Universal Citation: TN Comp Rules and Regs 1320-05-01-.03

Current through September 24, 2024

(1) The Sales and Use Tax shall be paid on the full amount charged for an automobile, trailer, or other motor vehicle without any deductions for labor or other charges for preparing a motor vehicle for sale, freight, federal excise tax, etc. The tax shall likewise be paid on the full amount charged for any accessories or parts sold with and installed on a motor vehicle. Any installation labor in connection with a sale of accessories, or repair labor involved in installing, replacing or repairing parts on a motor vehicle, is subject to the Sales or Use Tax.

(2) The bill of sale for a motor vehicle or trailer shall determine whether the vehicle is subject to or exempt from, the Sales or Use Tax, regardless of who may be named on the invoice. Unless the bill of sale indicates that the vehicle is being sold direct to another automobile dealer for resale purposes, or to a vendee exempt from paying the Sales or Use Tax, the dealer shall collect the appropriate Sales or Use Tax, except in cases of bona fide interstate commerce, as provided for in this rule and regulation.

(3) Automobile and other motor vehicle and trailer dealers making deliveries of vehicles in bona fide interstate commerce to a customer out of this State, or making sales to persons who will, within three calendar days of purchase, remove the vehicle to another state where it will be registered and used are not required to collect any Sales Tax on any such sales, provided:

(a) The sale is a bona fide transaction in which the dealer, or one of his employees, actually makes delivery of the vehicle to a point outside the State of Tennessee, or the sale is to one who will remove the vehicle to another state within three days and there is no knowledge or reason to believe that the vehicle will be used or brought back into the State of Tennessee.

(b) The dealer prepares, submits, and maintains supporting evidence of delivery to a customer outside the State, or to a purchaser who will remove the vehicle to another state, in the form of an affidavit prepared at the time of the sale containing the following information:
1. The name and Sales Tax registration number and invoice number of the dealer.

2. The name and address of the purchaser.

3. A description of the vehicle.

4. The date of the sale.

5. The place and date of delivery.

6. The name of the dealer, employee, or salesman, or other person making delivery of the vehicle, if delivered out of state.

7. The place where the vehicle will be registered.

8. The trade-in allowance given, and the total sales price of the vehicle.

9. A statement that no Tennessee tax has been paid.

10. A statement that the information given is true and correct.

This statement shall be executed in triplicate by both the dealer and purchaser.

(c) The dealer, or the employee making the delivery of the motor vehicle out of the State, shall also make an oath and affidavit within two days of delivery, indicating the date and place of delivery, and the name of the person to whom delivery was made. This statement shall be executed in triplicate. The provisions of this paragraph shall not apply in cases of delivery of a new vehicle or trailer from a factory or another dealer out of this State, but the dealer shall indicate this fact on the affidavit required of him and the customer, as indicated above, and maintain records to show that the delivery was made in that manner.

(d) The original and duplicate copies of each of the affidavits referred to in this sub-section shall be submitted with the Sales Tax return reporting such sales to the Department before any credit shall be given or allowed for sales in bona fide interstate commerce.

(4) A dealer selling an automobile or other motor vehicle to a salesman for use as a demonstrator or for any other purpose shall collect the appropriate Sales Tax due on each sale.

(5) A dealer using an automobile or other property for demonstration purposes is not required to pay Use Tax on property so used, providing it is returned to inventory within one hundred twenty (120) days. Use Tax liability will be incurred by a dealer who uses an automobile or other personal property for demonstration purposes more than one hundred twenty (120) days if, when sold, the price of the property is less than the dealer's cost. The Use Tax will be due on the amount by which the dealer's cost exceeds the selling Price.

(6) When a trade-in is involved in the purchase of a motor vehicle which has been imported for use in this State, the vehicle which was traded-in for the new vehicle must have been previously registered in the State of Tennessee in the name of the person importing the new vehicle into the State before any credit may be given for the allowance given for the trade-in. If the trade-in involved in the transaction was not previously registered in this State in the name of the person importing the second vehicle into the State, the trade-in must be considered a part of the purchase price or fair market value of the vehicle at the time it is imported into the State upon which the Use Tax is due and payable. The provisions of this paragraph shall not apply in computing any Sales Tax due and payable.

Authority: T.C.A. §§67-3045 and 67-101.

Disclaimer: These regulations may not be the most recent version. Tennessee may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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