TN Insurance Bulletin (1989-09-01)
TN Insurance Bulletin (1989-09-01): Payment of Sales Tax - Total Losses
NED McWHERTER
GOVERNOR
STATE OF TENNESSEE
DEPARTMENT OF COMMERCE AND INSURANCE
500 JAMES ROBERTSON PARKWAY
NASHVILLE, TENNESSEE 37219
B U L L E T I N
TO:
All Property and Casualty Insurers Doing
Business in Tennessee
FR:
Elaine A. McReynolds, Commissioner
Department of Commerce and Insurance
RE:
Payment of Sales Tax -
Total Losses
DA:
September 1, 1989
ELAINE A. McREYNOLDS
COMMISSIONER
It has
been brought to the Department's attention that
some insurers refuse to pay sales tax on the settlement of
automobile total losses.
The number of complaints indicates a
trend toward nonpayment of sales tax on claims.
A survey of
other
states
indicates
that
the
vast
majority
of
states
require payment of sales tax on total losses.
Furthermore,
insurers
include
sales
tax
in their payment
of
homeowners
losses,
and
in
the
payment
of
partial losses
on
personal
automobile claims.
It is the Department's position that the amount of sales
tax payable on the value of the damaged automobile at the time
of loss is owed on all losses.
This amount should be included
in all settlements and should not be used as a bargaining chip
in negotiating a settlement or only in those cases where the
insured or claimant makes demand for payment of sales tax.
This requirement
does not
apply
to
coverage of
leased
vehicles.
Failure to follow these procedures will be considered an
unfair trade practice.
EAM/cmf