State law says that the $5 environmental fee applies “on each purchase of a new motor vehicle to be titled and registered in [Tennessee].” (See Tenn. Code Ann. § 68-211-1103(a))
Therefore, as long as a dealer purchases, leases (or trades for) a vehicle for resale and not ultimately to title or register the vehicle in the dealer’s own name, then the $5 environmental fee would not apply. However, on a subsequent sale, the dealer should collect and remit the $5 environmental fee.
To read more about the tire environmental fee, please read important notice 15-19.