[Effective 1/1/2025]

(a) Notwithstanding any law to the contrary, a taxpayer that meets the gross sales threshold and the receipts factor threshold during the tax period and any taxpayers that are affiliates of such taxpayer shall each qualify for the application of this section and may elect the application of this section by filing an election form with the department and providing such information as may be required by the commissioner on or before the due date of the tax return for the period for which such election is to take effect. Such election shall remain in effect until revoked by the taxpayer or until the taxpayer no longer qualifies for the election.
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Terms Used In Tennessee Code 67-4-2023 v2

  • Affiliate: means any entity:
    (i) In which the taxpayer, directly or indirectly, has more than fifty percent (50%) ownership interest. See Tennessee Code 67-4-2004
  • Commissioner: means the commissioner of revenue. See Tennessee Code 67-4-2004
  • Department: means the department of revenue. See Tennessee Code 67-4-2004
  • Personal property: All property that is not real property.
  • Personal property: includes money, goods, chattels, things in action, and evidences of debt. See Tennessee Code 1-3-105
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • Sales: means all gross receipts of the taxpayer not allocated under this part. See Tennessee Code 67-4-2004
  • State: means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States and any foreign country or political subdivision thereof. See Tennessee Code 67-4-2004
  • taxpayer: means every corporation, subchapter S corporation, limited liability company, professional limited liability company, registered limited liability partnership, professional registered limited liability partnership, limited partnership, cooperative, joint-stock association, business trust, regulated investment company, REIT, state-chartered or national bank, or state-chartered or federally chartered savings and loan association. See Tennessee Code 67-4-2004
(b) For purposes of this section, the following shall apply:

(1) A taxpayer meets the gross sales threshold if the taxpayer’s sales of tangible personal property made in this state during the tax period to all distributors exceed one billion dollars ($1,000,000,000), as determined under § 67-4-2012 without regard to this section, or if a taxpayer’s sales of alcoholic beverages, as defined in § 57-3-101, made in this state to an affiliate that continues the manufacturing process exceed one billion dollars ($1,000,000,000), as determined under § 67-4-2012 without regard to this section;
(2) A taxpayer meets the receipts factor threshold if the taxpayer’s receipts factor, as determined under § 67-4-2012 without regard to this section, exceeds seven and one-half percent (7.5%) and more than fifty percent (50%) of the taxpayer’s sales in this state are certified distribution sales.
(3)

(A) “Certified distribution sales” means sales of tangible personal property made in this state by the taxpayer to any distributor, whether or not affiliated with the taxpayer, that is resold for ultimate use or consumption outside the state; provided, that the distributor has certified that such property has been resold for ultimate use or consumption outside this state. Such certification shall be made in the manner prescribed by the commissioner.
(B) “Certified distribution sales” also includes sales of alcoholic beverages, as defined in § 57-3-101, when such sales are made in this state by the taxpayer to an affiliate that continues the manufacturing process, prior to the manufactured beverage being sold for ultimate use or consumption outside this state; provided, that the affiliate has certified that such property has been sold for ultimate use or consumption outside this state. Such certification must be made in the manner prescribed by the commissioner.
(c)

(1) A taxpayer that has made the election described in subsection (a) shall, so long as such election is in effect, apportion net earnings and net worth in the manner prescribed elsewhere in this part and the Franchise Tax Law, compiled in part 21 of this chapter; provided, however, that the total amount derived from certified distribution sales shall be excluded from the numerator of the receipts factor, as that term is defined elsewhere in this part and the Franchise Tax Law.
(2) A taxpayer that has made the election described in subsection (a) shall, so long as such election is in effect, pay to the commissioner, annually, a gross receipts tax on the total amount of certified distribution sales excluded from the numerator of the taxpayer’s receipts factor for purposes of this part and part 21 of this chapter. The amount of such tax shall be computed in the following manner:

(A) In the case of taxpayers excluding no more than two billion dollars ($2,000,000,000) of certified distribution sales for the tax period, the amount of such tax shall be five-tenths of one percent (0.5%) of the total amount of certified distribution sales;
(B) In the case of taxpayers excluding more than two billion dollars ($2,000,000,000) but no more than three billion dollars ($3,000,000,000) of certified distribution sales for the tax period, the amount of such tax shall be:

(i) Three-eighths of one percent (0.375%) of certified distribution sales in excess of two billion dollars ($2,000,000,000); plus
(ii) Ten million dollars ($10,000,000);
(C) In the case of taxpayers excluding more than three billion dollars ($3,000,000,000) but no more than four billion dollars ($4,000,000,000) of certified distribution sales for the tax period, the amount of such tax shall be:

(i) One-fourth of one percent (0.25%) of certified distribution sales in excess of three billion dollars ($3,000,000,000); plus
(ii) Thirteen million, seven hundred fifty thousand dollars ($13,750,000); and
(D) In the case of taxpayers excluding more than four billion dollars ($4,000,000,000) of certified distribution sales for the tax period, the amount of such tax shall be:

(i) One-eighth of one percent (0.125%) of certified distribution sales in excess of four billion dollars ($4,000,000,000); plus
(ii) Sixteen million, two hundred fifty thousand dollars ($16,250,000).
(3) The tax due under subdivision (c)(2) shall be in addition to all other taxes, including the tax imposed by § 67-4-2007(a) and the tax imposed by § 67-4-2105(a).
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