Tennessee Clarifies Definition of Tangible Personal Property
On April 7, Tennessee Gov. Bill Lee signed House Bill 131, which adds clarity to the state’s definition of tangible personal property for sales tax purposes. Several types of fixtures are now excluded from the definition of tangible personal property. Effective July 1, 2021, the Tennessee Code explicitly states that “tangible personal property” does not include mains, pipes, pipelines, or tanks after it has become attached to a building, or other structure, or installed underground for conducting steam, heat, water, wastewater, oil, electricity, gas, or any property, substance, or product capable of transportation or conveyance therein or that is protected thereby, excluding propane tanks for residential use and aboveground storage tanks that can be moved without disassembly and are not affixed to the land. Upon installation, such mains, pipes, pipelines, and tanks are deemed realty for sales tax purposes.
Further, the definition of “tangible personal property” does not include surface, underground, or elevated railroads, or railroad structures, substructures, and superstructures, tracks and the metal thereon, branches, switches, and other improvements or structures permitted or authorized to be made in, upon, or under public or private property. Upon installation, such items also would be considered realty for sales tax purposes.
The Tennessee Department of Revenue asserted that taxpayers already file sales and use taxes consistent with the updated legislation. As a result, the fiscal effect, as well as the effect on taxpayers, is not expected to be significant.
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