Tennessee § 67-4-711 - Deductions.

§ 67-4-711. Deductions.

In computing tax, there may be deducted from the measure of tax the following items: Cash discounts allowed and taken on sales; The proceeds of the sale of goods, wares, or merchandise returned by the customer when the sale price is refunded either in cash or by credit; The amount allowed as trade-in value for any article sold; Amounts representing the difference between the remaining amount due on the selling price of tangible personal property sold on a security agreement and five hundred dollars ($500), when the wholesaler or retailer actually repossesses the property sold pursuant to the terms of the security agreement; Amounts actually paid during the business tax period by a contractor to a subcontractor holding a business license or who is licensed by the state board for licensing contractors for performing the activities described in § 67-4-708(4)(A). For a contractor to be eligible to claim the deduction, the contractor must provide, on a form prescribed by the commissioner, the name, address and business license or contractor's license number of the subcontractor and the amount subcontracted. The contractor also must maintain in its records a copy of the subcontractor's business license or license issued by the board for licensing contractors; This subdivision (a)(5) shall apply only to new contracts issued sixty (60) days after July 1, 2009. Contracts issued before that date shall be subject to this subdivision (a)(5) as it existed immediately prior to July 1, 2009; The sale of any service that is delivered to a location outside this state; The proceeds of the sale of school supplies and meals to students and school employees on campus by elementary and secondary schools; provided, that the proceeds of all sales of such items by private independent contractors shall not be deducted; and A deduction from gross receipts shall be allowed for bad debts arising from receipts on which the tax imposed by this chapter was paid. Any deduction taken that is attributed to bad debts shall not include interest. For purpose of calculating the deduction, a “bad debt” is as defined in 26 U.S.C. § 166. However, the amount calculated pursuant to 26 U.S.C. § 166 shall be adjusted to exclude: Financing charges or interest; Sales or use taxes charged on the purchase price; Uncollectible amounts on property that remain in the possession of the seller until the full purchase price is paid; Expenses incurred in attempting to collect any debt; and Repossessed property. The deduction provided for by this subdivision (a)(8) shall be deducted on the return for the period during which the bad debt is written off as uncollectible in the claimant's books and records and is eligible to be deducted for federal income tax purposes. For purposes of this subdivision (a)(8), a claimant who is not required to file federal income tax returns may deduct a bad debt on a return filed for the period in which the bad debt is written off as uncollectible in the claimant's books and records and would be eligible for a bad debt deduction for federal income tax purposes if the claimant was required to file a federal income tax return. If a deduction is taken for a bad debt and the debt is subsequently collected in whole or in part, the tax on the amount so collected shall be paid and reported on the return filed for the period in which the collection is made. When the amount of bad debt exceeds the amount of gross receipts for the period during which the bad debt is written off, the taxpayer may file a refund claim and receive a refund pursuant to § 67-1-1802. The statute of limitations for filing the claim shall be measured from the due date of the return on which the bad debt could first be claimed. In computing tax, there may be deducted from the measure of tax the following taxes; provided, that such deductions may be claimed only by the taxpayer who made direct payment to the applicable governmental agency and, in addition, by all subsequent vendees of such taxpayer licensed under this chapter to do business in the state: Federal excise taxes imposed on beer, gasoline, motor fuel and tobacco products; Tennessee gasoline tax, compiled in chapter 3 of this title; Tennessee motor vehicle fuel use tax, compiled in chapter 3 of this title; Tennessee tobacco tax, compiled in part 10 of this chapter; Tennessee beer taxes, compiled in title 57, chapters 5 and 6; Special tax on petroleum products, compiled in chapter 3, part 9 of this title; Taxes that are required to be passed on to the consumer by the Retailers' Sales Tax Act, compiled in chapter 6 of this title, or by the provisions of title 57, chapter 4, relative to sale of alcohol for on-premises consumption, should be excluded from the gross sales reported on the business tax return, but such taxes passed on to the consumer may be deducted from the gross sales reported, if such taxes are included in gross sales on the business tax return; Liquefied gas tax, compiled in chapter 3, part 11 of this title; and Taxes that are required to be collected by a bail bondsman pursuant to part 8 of this chapter shall be excluded from the gross sales reported on the business tax return, but such taxes collected by the bail bondsman may be deducted from the gross sales reported if such taxes are included in gross sales on the business tax return. Acts 1971, ch. 387, § 10; 1972, ch. 850, § 9; 1979, ch. 4, § 1; 1979, ch. 325, § 2; 1981, ch. 201, § 1; T.C.A., § 67-5810; Acts 1984, ch. 761, § 1; 1986, ch. 782, § 1; 1991, ch. 38, § 2; 1992, ch. 662, § 1; 2009, ch. 530, § 77; 2013, ch. 313, § 12; 2015, ch. 514, § 4; 2017, ch. 236, § 1. Compiler's Notes. Acts 1991, ch. 38, § 3 provided that the amendment to this section by that act shall apply to business tax returns filed for tax periods ending on or after July 1, 1991. Acts 1992, ch. 662, § 2 provided that the amendment by that act applies to tax periods beginning on or after October 1, 1991. Acts 2013, ch. 313, § 1 provided that the act, which amended subdivision (a)(6), shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.” Acts 2013, ch. 313, § 23 provided that the act, which amended subdivision (a)(6), shall apply to tax periods that begin on or after January 1, 2014. Acts 2015, ch. 514, § 1 provided that the act shall be known and may be cited as the “Revenue Modernization Act”. For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514. Acts 2015, ch. 514, § 31 provided that the act, which amended (a)(6), shall apply to all tax years beginning on or after January 1, 2016. Amendments. The 2013 amendment, effective January 1, 2014, rewrote (a)(6) which read: “Sales of service substantially performed in other states;”. The 2015 amendment rewrote (a)(6), which read: “Sales of services that are received by customers located outside the state;”. The 2017 amendment added (b)(9). Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014. Acts 2015, ch. 514, § 31. January 1, 2016. Acts 2017, ch. 236, § 2. April 28, 2017.