Tennessee Code Annotated

Tenn. Code Ann. § 67-5-901 (2026)

Classification and rate of assessment - Leased property

✓ current as of May 2026

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(a) For purposes of taxation, all tangible personal property, except inventories of merchandise held by merchants and businesses for sale and exchange by persons taxable under chapter 4, part 7 of this title, and unused tangible personal property shall be classified according to its use and assessed as follows:
- (1) Public utility property shall be assessed at fifty-five percent (55%) of its value;
- (2) Industrial and commercial property shall be assessed at thirty percent (30%) of its value; and
- (3)
  - (A) All other tangible personal property shall be assessed at five percent (5%) of its value, except that, for the purpose of taxation under this chapter, all other tangible personal property shall be deemed to have no value;
  - (B) All tangible personal property that is not in use shall be classified according to its immediate most suitable economic use, which shall be determined after consideration of the following:
    - (i) Immediate past use, if any;
    - (ii) Nature of the property;
    - (iii) Classification of the real property upon which it is located;
    - (iv) Normal use of the property;
    - (v) Ownership; and
    - (vi) Any other factors relevant to a determination of the immediate most suitable economic use of the property.

(b)
- (1) "Inventories of merchandise held by merchants and businesses for sale and exchange" includes tangible personal property held for lease or rental, but does not include such property in the possession of a lessee. Leased personal property in the possession of the lessee shall be classified and assessed according to the use of the lessee.
- (2) Prosthetic surgical kits, including reusable tools and containers, as well as prosthetics and supplies, shall be considered "inventories of merchandise held by merchants and businesses for sale and exchange" as to the typical stock on hand at the premises of the merchant or business owner, or when held for thirty (30) days or less by a customer for use in surgeries; provided, that proceeds of the transaction are subject to business tax. Kits leased or consigned to the same customer/user for longer than thirty (30) days, with or without a written lease or consignment agreement, shall be considered leased tangible personal property assessable to the customer/user. The typical stock on hand at the premises of the customer/user shall be considered leased tangible personal property unless otherwise documented. Leased or consigned kits otherwise assessable to the customer/user but withdrawn or relocated from the customer/user's premises by the lessor within thirty (30) days may be adjusted by filing of an amended tangible personal property schedule for the year assessed according to the applicable statute, if the basis for the adjustment is documented.

Acts 1973, ch. 226, § 6; 1977, ch. 337, § 2; T.C.A., § 67-616; Acts 1988, ch. 941, §§ 2, 3; 1990, ch. 1075, § 7; 2001, ch. 448, § 1; 2009, ch. 530, § 131.

Notes of Decisions

Cited in 8 cases (1 in the last 5 years), 1983–2021 · leading case: Nissan North Am., Inc. v. Haislip, 155 S.W.3d 104 (Tenn. Ct. App. 2004).

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Nissan North Am., Inc. v. Haislip, 155 S.W.3d 104 (Tenn. Ct. App. 2004). · cites it 6× “*107 Analysis We begin our analysis by noting that Tenn.Code Ann. § 67-5-901, et seq., is read in pari materia with the Business Tax Act, which is codified at Tenn.”

In the Matter of All Assessments, Review of Ad Valorum, 58 S.W.3d 95 (Tenn. 2000). · cites it 8× “Based on this constitutional amendment, the General Assembly enacted the following legislation, which is currently codified in Tenn. Code Ann. § 67-5-901 (a): (1) Public utility property shall be assessed at fifty-five percent (55%) of its value; (2) Industrial and commercial…”

Sherwood Co. v. Clary, 734 S.W.2d 318 (Tenn. 1987). · cites it 2× “The issue presented by this appeal is the constitutionality of T.C.A. § 67-5-901(3)(A) dealing with the assessment of non-business tangible personal property.”

Kellogg Co. v. Tennessee Assessment Appeals Comm'n, 978 S.W.2d 946 (Tenn. Ct. App. 1998). · cites it 7× “” Appel-lees “[d]enied as stated” the request and answered as follows: Tenn.Code Ann. § 67-5-901 provides that tangible personal property not in use shall nevertheless be classified according to its immediate most suitable economic use determined in part by “immediate past use,…”

IBM Credit Corp. v. Cnty. of Hamilton, 830 S.W.2d 77 (Tenn. Ct. App. 1992). · cites it 4× “The issue on appeal is whether plaintiff is required to pay personal property taxes under Tenn.Code Ann. § 67-5-901 et seq. for tangible personal property previously leased to third parties.”

Colonial Pipeline Co. v. TN State Bd. Of Equalization (Tenn. Ct. App. 2021). · cites it 2× “II, § 28; Tenn. Code Ann. § 67-5-901 (a). As Colonial points out, our Supreme Court determined in In re All Assessments6 that the BOE has the authority to reduce the appraised (and assessed) value of centrally assessed 5 Tennessee Code Annotated section 67-5-1302(b)(1) states:…”

Coble Sys., Inc. v. Armstrong, 660 S.W.2d 802 (Tenn. Ct. App. 1983). “§ 67-616 [now codified as § 67-5-901] of the Property Tax Act excepts [exempts] from taxation thereunder “inventories of merchandise held by merchants and businesses for sale and exchange by persons taxable under § 67-5801 et seq.”

Cent. Woodwork, Inc. v. Cheyenne Johnson, Shelby Cnty. Assessor of Prop. (Tenn. Ct. App. 2015). · cites it 2× “2 On April 21, 2011, Central Woodwork filed appeals for each of the tax years in question with the Tennessee State Board of Equalization (“the State Board”), arguing that the paging system constituted real property rather than tangible personal property and that the individual…”

— Tenn. Code Ann. § 67-5-901(3)(A) — 2 cases

Sherwood Co. v. Clary, 734 S.W.2d 318 (Tenn. 1987). “The issue presented by this appeal is the constitutionality of T.C.A. § 67-5-901(3)(A) dealing with the assessment of non-business tangible personal property.”

Kellogg Co. v. Tennessee Assessment Appeals Comm'n, 978 S.W.2d 946 (Tenn. Ct. App. 1998). “” Appel-lees “[d]enied as stated” the request and answered as follows: Tenn.Code Ann. § 67-5-901 provides that tangible personal property not in use shall nevertheless be classified according to its immediate most suitable economic use determined in part by “immediate past use,…”

— Tenn. Code Ann. § 67-5-901(a) — 3 cases

In the Matter of All Assessments, Review of Ad Valorum, 58 S.W.3d 95 (Tenn. 2000). “Based on this constitutional amendment, the General Assembly enacted the following legislation, which is currently codified in Tenn. Code Ann. § 67-5-901 (a): (1) Public utility property shall be assessed at fifty-five percent (55%) of its value; (2) Industrial and commercial…”

IBM Credit Corp. v. Cnty. of Hamilton, 830 S.W.2d 77 (Tenn. Ct. App. 1992). “The issue on appeal is whether plaintiff is required to pay personal property taxes under Tenn.Code Ann. § 67-5-901 et seq. for tangible personal property previously leased to third parties.”

Cent. Woodwork, Inc. v. Cheyenne Johnson, Shelby Cnty. Assessor of Prop. (Tenn. Ct. App. 2015). “2 On April 21, 2011, Central Woodwork filed appeals for each of the tax years in question with the Tennessee State Board of Equalization (“the State Board”), arguing that the paging system constituted real property rather than tangible personal property and that the individual…”

— Tenn. Code Ann. § 67-5-901(b) — 1 case

Nissan North Am., Inc. v. Haislip, 155 S.W.3d 104 (Tenn. Ct. App. 2004). “*107 Analysis We begin our analysis by noting that Tenn.Code Ann. § 67-5-901, et seq., is read in pari materia with the Business Tax Act, which is codified at Tenn.”

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