Sales Tax Exemption for Interstate Commerce Motor Vehicles and Trailers Overview

AUTHORITY:

Tenn. Code Ann. Section 67-6-331

DESCRIPTION:

  • Persons who have qualified with the federal government or other state regulatory agency as a common or contract carrier may purchase motor vehicles free from sales tax in Tennessee by completing an application to be filed with the county clerk upon titling and registration. Each vehicle must meet the following conditions pursuant to Tenn. Code Annotated §67-6-331 to be considered for exemption:
    • Have a gross vehicle weight rating (GVWR) of Class 3 (16,000 pounds) or above (truck); or
    • Be a trailer, semi-trailer, or pole trailer; AND
    • Be used to transport passengers or cargo principally in interstate or foreign commerce. “Principally” means more than 50% of the operational time of the motor vehicle.
  • The purchaser must also:
    • Complete the Application for Sales Tax Exemption for Interstate Commerce Motor Vehicles and Trailers (Form RV-F1300401); and
    • Provide a copy of the common or contract carrier designation to the county clerk upon registration

Qualifying Registrations

  • The truck or trailer must be registered either through the International Registration Program (IRP) or have an operating authority or permit issued by the Interstate Commerce Commission, Federal Highway Administration, or the Federal Motor Carrier Safety Administration. Commonly, these are known as ICC or MC numbers.
  • Having a “ICC” or “MC” number does not automatically exempt the registrant from tax. First, the affidavit form must be completed. Also, as stated on the application form, the GVWR must be 16,000 pounds or above, and it must be used to transport passengers or cargo in interstate commerce more than 50% of the time. Therefore, if the company has the proper type of vehicle and an ICC or MC number, but only uses it within the state of Tennessee (intrastate), the applicant would not qualify for exemption.
  • Motor Vehicles and Trailers with a Gross Vehicle Weight Rating (GVWR) of a class three (3) or above, used in service of passenger or cargo transportation principally in interstate or foreign commerce by a common carrier or a contract carrier under authority granted by the federal government are exempt from sales and use tax. (For-hire motor carriers only).
  • The Federal Motor Carrier Safety Administration offers the following definitions:
    • An “Authorized For Hire Carrier” is a person or company that provides transportation of cargo or passengers for compensation. A for hire carrier, in addition to the USDOT Number, will also be required to obtain Operating Authority (Motor Carrier Number).
    • A “Common Carrier” is a person or company who provides for-hire truck transportation
      to the general public. Common carriers must file liability (BI&PD) insurance but are not
      required to file cargo insurance.
    • A “Contract carrier” is a person or company who provides for-hire truck transportation
      to specific, individual shippers based on contracts.

SUMMARY

  • Owners of interstate motor vehicles and trailers outlined in this document may apply for title only
  • Sales and use tax are not required
  • There are usually three (3) situations where a registrant would choose to "title only" a motor vehicle and/or trailer through the County Clerk office:
    • A dealer sold a vehicle to the purchaser;
    • The purchaser (lessor) will title the vehicle in their name and lease the vehicle to the lessee; or
    • A dealer sold the vehicle to the purchaser. The purchaser (lessor/owner) financed the vehicle and leased the vehicle to a lessee. The lessee titles the vehicle in their name

FORMS

Sales Tax Exemption Form

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