2021 Tennessee Code
Title 67 - Taxes and Licenses
Chapter 4 - Privilege and Excise Taxes
Part 7 - Business Tax Act
§ 67-4-702. Part Definitions

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  1. As used in this part, unless the context otherwise requires:

    1. “Affiliated business entity” means a business entity:

      1. In which the taxpayer, directly or indirectly, has more than fifty percent (50%) ownership interest;
      2. That, directly or indirectly, has more than fifty percent (50%) ownership interest in the taxpayer; or
      3. In which a person described in subdivision (a)(1)(B) directly or indirectly has more than fifty percent (50%) ownership interest. For purposes of this subdivision (a)(1)(C), a noncorporate entity is more than fifty-percent owned if upon liquidation more than fifty percent (50%) of the assets of the noncorporate entity directly or indirectly accrue to the entity having the ownership interest;

      1. “Sale” does not include the transfer of tangible personal property from a wholesaler to another wholesaler or from a retailer to another retailer where the amount paid by the transferee to the transferor does not exceed the transferor's cost including freight in and storage costs, and transportation costs incurred in the transfer from the transferor to the transferee; “Sales price” means the total amount for which tangible personal property or services rendered is sold, including any services that are a part of the sale, valued in money, whether paid in money or otherwise, and includes any amount for which credit is given to the purchaser by the seller, without any deduction from the price on account of the cost of the property sold, the cost of materials used, labor or service cost, losses, or any other expense whatsoever; provided, that “sales price” does not include any additional consideration given by the purchaser for the privilege of making deferred payments, regardless of whether such additional consideration shall be known as interest, time price differential on conditional sales contracts, carrying charges or any other name by which it shall be known, and does not include any additional consideration received by a motor vehicle dealer from a lender for the sale or assignment to the lender of a chattel lease or conditional sales contract. “Sales price” for services rendered by a person for an affiliated business entity does not include any amount that is accounted for as a reasonable allocation of cost incurred in providing the service. “Sales price” does not include any advertising cost paid by a seller to an auctioneer for the purpose of advertising an auction, when no portion of such payment is retained as profit by the auctioneer, and when such payment has been placed in an escrow or a trust account by the auctioneers on behalf of the seller; (A) “Seller” means every consignee, bailee, factor or auctioneer having either actual or constructive possession of tangible personal property, or having possession of the documents of title to tangible personal property, with power to sell such tangible personal property in the consignee's, bailee's, factor's or auctioneer's own name and actually so selling, is deemed the seller of such tangible personal property within the meaning of this part; and further, the consignor, bailor, principal or owner is deemed the seller of such tangible personal property to the consignee, bailee, factor or auctioneer;
      2. The burden shall be upon the taxpayer in every case to establish the fact that the taxpayer is not engaged in the business of selling tangible personal property, but is acting merely as broker or agent in promoting sales for a principal. Such claim will be allowed only when the taxpayer's accounting records are kept in such manner as the commissioner shall by regulation provide; “Services” means and includes every activity, function or work engaged in by a person for profit or monetary gain, except as otherwise provided in this part. Services for profit or monetary gain does not include services rendered by a person for an affiliated business entity; provided, that the services are accounted for as allocations of cost incurred in providing the service without any markup whatsoever. “Services” does not include sales of tangible personal property; (A) “Substantial nexus in this state” means any direct or indirect connection of the taxpayer to this state such that the taxpayer can be required under the Constitution of the United States to remit the tax imposed under this part. Such connection includes, but is not limited to, any of the following:
        1. The taxpayer is organized or commercially domiciled in this state;
        2. The taxpayer owns or uses its capital in this state;
        3. The taxpayer has systematic and continuous business activity in this state that has produced gross receipts attributable to customers in this state; or
        4. The taxpayer has bright-line presence in this state. A person has bright-line presence in this state for a tax period if any of the following applies:

          1. The taxpayer's total receipts in this state during the tax period, as determined consistent with § 67-4-2012, exceed the lesser of five hundred thousand dollars ($500,000) or twenty-five percent (25%) of the taxpayer's total receipts everywhere during the tax period;
          2. The average value of the taxpayer's real and tangible personal property owned or rented and used in this state during the tax period, as determined consistent with § 67-4-2012, exceeds the lesser of fifty thousand dollars ($50,000) or twenty-five percent (25%) of the average value of all the taxpayer's total real and tangible personal property; or
          3. The total amount paid in this state during the tax period by the taxpayer for compensation, as determined consistent with § 67-4-2012, exceeds the lesser of fifty thousand dollars ($50,000) or twenty-five percent (25%) of the total compensation paid by the taxpayer;

          “Retail sale” or “sale at retail” means any sale other than a wholesale sale;

          “Retailer” means any person primarily engaged in the business of making retail sales. For purposes of this subdivision (a)(17), “primarily” means that at least fifty percent (50%) of the taxable gross sales of the business are retail sales;

          (A) (i) “Sale” means any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever of tangible personal property for a consideration, and includes the fabrication of tangible personal property for consumers who furnish, either directly or indirectly, the materials used in fabrication work, and the furnishing, repairing or servicing for a consideration of any tangible personal property consumed on the premises of the person furnishing, preparing or serving such tangible personal property;

          A transaction whereby the possession of property is transferred but the seller retains title as security for the payment of the price is deemed a sale;

          “Sale” includes the furnishing of any of the things or services taxable under this part;

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