Persons engaged in the business of renting motor vehicles must collect and remit a rental surcharge or tax to the Department of Revenue on all rentals of motor vehicles that are for periods of 31 days or less.
The auto rental surcharge also applies to rental of “trailers” as defined in Tenn. Code Ann. § 55-1-105(e). “Trailer” means every vehicle with or without motive power, other than a pole trailer, designed for carrying persons or property and for being drawn by a motor vehicle and so constructed that no part of its weight rests upon the towing vehicle.
The rate for the auto rental surcharge is 3% of the gross proceeds of the rental less deductions allowed against the surcharge including county wheel taxes, municipal fees, and all title and registration fees. This surcharge is in addition to sales tax.
The charges subject to the auto rental surcharge include any charges related to the rental, such as charges for gas and insurance. The auto rental surcharge is due quarterly on the 15th day of the month following the quarter (Jan 15th, April 15th, July 15th, and Oct 15th).
The auto rental surcharge is not imposed on entities or individual vehicles owners engaged in peer-to-peer car sharing.
Reference: Tenn. Code Ann. 67-4-1901.