2023 Tennessee Code › Title 67 - TAXES AND LICENSES (§§ 67-1-101 — 67-10-107) › Chapter 4 - PRIVILEGE AND EXCISE TAXES (§§ 67-4-101 — 67-4-3206) › Part 31 - IN LIEU OF TAX PAYMENTS (§ 67-4-3101) › Section 67-4-3101 - Obligation to make in lieu of tax payments on certain wholesale electric current

(a)
It is the intention of this part to establish an obligation to make in lieu of tax payments to help keep Tennessee and its local governments whole from any diminution in the in lieu of tax payments paid by the Tennessee Valley authority on account of the provision of wholesale electric current to municipal utilities, electric cooperatives and other similar entities for resale within the state by sources other than the Tennessee Valley authority. Accordingly, each person, including each governmental and cooperatively organized person, engaged in the business of making covered wholesale sales of electric current to a municipality, electric cooperative or other similar customer shall, for the privilege of doing such business, remit to the state for state purposes a payment in lieu of tax in an amount to be calculated in accordance with subsection (b).
(b)
(1)
For purposes of this section:
(A)
"Covered wholesale sales of electric current" means wholesale sales of electric current for resale within any area where the Tennessee Valley authority is the primary source of wholesale power as of June 11, 2010;
(B)
"Gross receipts" means the total gross receipts derived from all covered wholesale sales of electric current; and
(C)
"Tennessee apportioned gross receipts" means gross receipts multiplied by a ratio obtained by taking the arithmetical average of the following two ratios:
(i)
The percentage by which the gross receipts derived from covered wholesale sales of electric current occurring within Tennessee bears to the total gross receipts derived from all covered wholesale sales of electric current; and
(ii)
The percentage by which the book value of the power property held in Tennessee by the seller of covered wholesale sales of electric current bears to the book value of all power property held by the seller of covered wholesale sales of electric current. The book value of power property shall include that portion of the investment allocated or estimated to be allocable to power.
(2)
The payment in lieu of tax required pursuant to subsection (a) shall equal five percent (5%) of the Tennessee apportioned gross receipts of the person making covered wholesale sales of electric current.
(c)
There shall be credited upon the in lieu of tax payments required by this section any taxes paid pursuant to part 3, 4, 20, or 21 of this chapter by or on behalf of the person engaged in a covered wholesale sale of electric current on account of the ownership or operation of electric generation facilities and other property used to generate, transmit or distribute such electric current. There shall be further credited upon the in lieu of tax payments required by this section any ad valorem taxes or payments in lieu of ad valorem taxes paid to the state of Tennessee or local governments within the state by or on behalf of the person engaged in a covered wholesale sale of electric current on account of the ownership or operation of electric generation facilities and other property used to generate, transmit or distribute such electric current.
(d)
If the person making covered wholesale sales of electric current does not make the required in lieu of tax payment calculated in accordance with subsections (b) and (c), then each municipality, electric cooperative or other similar customer engaged in making use of covered wholesale sales of electric current shall be responsible for making such payment in lieu of taxes applicable to the customer's use of such power and energy. Only one (1) in lieu of tax payment shall be required for a single sale and use of a covered wholesale sale of electric current.
(e)
This section and the required in lieu of tax payments do not apply to any wholesale sale of electric current to or by the Tennessee Valley authority or to any power property held by or attributed to the Tennessee Valley authority.
(f)
Any in lieu of tax payment collected pursuant to this section shall be added to the amounts received by the state from payments in lieu of taxes from the Tennessee Valley authority and the combined amount shall then be distributed according to §
67-9-101
.
(g)
Except as otherwise specifically provided in this section, the in lieu of tax obligations required by this section shall be administered and collected in the same manner as privilege taxes are administered and collected under part 3 of this chapter.
Acts 2010, ch. 1035, § 3.