Section 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.Tenn. Comp. R. & Regs. 1320-05-01-.32
Original rule certified June 7, 1974 Amendment filed December 15, 1986; effective January 29, 1987.Authority: T.C.A. §§ 67-1-102, 67-6-204 and 67-6-402.