Rental Vehicle Surcharge
Legal Basis of Tax
In addition to state tax provided in T.C.A. § 67-4-1901, the surcharge or tax of one percent of the gross proceeds derived from the lease or rental of any passenger motor vehicle, truck or trailer for a period of five days or less; provided, that said surcharge or tax will not apply to any automobile rented as a replacement vehicle, the cost of which is covered by insurance or by a business that rents a truck or trailer for the purpose of transporting goods, or by any individual or business that rents a vehicle as a replacement while the renter's vehicle is being repaired, replaced or serviced; provided further, that the individual presents to the renter upon return of the rented vehicle a copy of the repair or service invoice or signs a statement under penalty of perjury that the lease or rental of the vehicle is used as a replacement for a vehicle that is being repaired, replaced or serviced. The surcharge or tax shall not apply to any vehicle rental transaction in which an entity whose principal business activity is the sale or service of new and used motor vehicles is the renter. This surcharge or tax shall apply to the gross proceeds from the rental agreement, excluding any sales tax imposed by Chapter 6 of the Tennessee Code Annotated. The surcharge or tax shall also be subject to the exemptions provided by T.C.A. § 67-4-1906. The surcharge or tax shall not be subject to a credit provided by T.C.A. § 67-4-1903 and shall be implemented consistent with existing tax policies and procedures of the department of revenue and of the remainder of this chapter.The surcharge or tax shall be remitted to the department of finance. (Code of Ordinance 5.32.190)