2023 Tennessee Code › Title 67 - TAXES AND LICENSES (§§ 67-1-101 — 67-10-107) › Chapter 6 - SALES AND USE TAXES (§§ 67-6-101 — 67-6-907) › Part 5 - COLLECTION AND ENFORCEMENT GENERALLY (§§ 67-6-501 — 67-6-541) › Section 67-6-541 - Sales to or use by a contractor, subcontractor, or material vendor of tangible personal property

(a)
(1)
Notwithstanding chapter 856, § 4(g) of the Public Acts 2002, sales to or use by a contractor, subcontractor, or material vendor of tangible personal property, including rentals of tangible personal property and labor or services performed in the fabrication, manufacture, delivery, or installation of the tangible personal property, when the property is sold or used solely in performance of a lump sum or unit price construction contract entered into prior to July 15, 2002, or awarded by the state or a political subdivision pursuant to a bid opening that occurred prior to July 15, 2002, shall be subject to tax at the rate of the tax levied on the sale of tangible personal property at retail by §
67-6-202
plus the applicable local option sales tax rate under part 7 of this chapter. In addition, sales to or use by a subcontractor of tangible personal property, including rentals of tangible personal property and labor or services performed in the fabrication, manufacture, delivery, or installation of the tangible personal property, when the property is sold or used solely in performance of a written subcontract entered into prior to September 1, 2002, if the subcontract is made pursuant to a general contract described in this subsection (a), shall be subject to tax at the rate of the tax levied on the sale of tangible personal property at retail by §
67-6-202
plus the applicable local option sales tax rate under part 7 of this chapter.
(2)
If the tax in subdivision (a)(1) is paid to a vendor, the contractor or subcontractor may file a claim with the commissioner for a refund of the tax paid to any of the contractor's vendors at a rate in excess of six percent (6%) plus the local option sales tax rate in effect or operative on July 1, 2002, in the county or municipality in which the sale is sourced.
(3)
If the tax in subdivision (a)(1) is remitted directly to the department by the contractor or subcontractor, the contractor or subcontractor may claim a credit on its sales and use tax return covering the same period in which the tax is paid. The credit shall equal the amount of tax remitted to the department at a rate in excess of six percent (6%) plus the local option sales tax rate in effect or operative on July 1, 2002, in the county or municipality in which the sale is sourced.
(b)
(1)
Notwithstanding any law to the contrary, sales to or use by a contractor, subcontractor, or material vendor of tangible personal property, including rentals of tangible personal property and labor or services performed in the fabrication, manufacture, delivery, or installation of the tangible personal property, when the property is sold or used solely in performance of a lump sum or unit price construction contract entered into prior to January 1, 2008, or awarded by the state or a political subdivision of the state pursuant to a bid opening that occurred prior to January 1, 2008, shall be subject to tax as otherwise provided in this chapter.
(2)
If the tax in subdivision (b)(1) is paid to a vendor, the contractor or subcontractor may file a claim with the commissioner for a refund of the tax paid to any of the contractor's vendors that is in excess of the amount that would have been due by application of former Tenn. Comp. R. & Regs. 1320-5-1-.71, as in effect on January 1, 2007.
(3)
If the tax in subdivision (b)(1) is remitted directly to the department by the contractor or subcontractor, the contractor or subcontractor may claim a credit on its sales and use tax return covering the same period in which the tax is paid. The credit shall equal the amount of tax that is in excess of the amount that would have been due by application of Tenn. Comp. R. & Regs. 1320-5-1-.71, as in effect on January 1, 2007.
(c)
For purposes of this section, "lump sum or unit price construction contract" means a written contract for the construction of improvements to real property under which the amount payable to the contractor, subcontractor, or material vendor is fixed without regard to the costs incurred in the performance of the contract.
Acts 2004, ch. 959, § 19; 2005, ch. 311, § 2; 2007 , ch. 602, §§ 52, 116.