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Tennessee 2023 Sales Tax Guide

Tennessee 2023 Sales Tax Guide

Tennessee Sales Tax in a Word

Welcome, partners, to the grand rodeo of Tennessee sales tax! Just like mastering the fiddle or perfecting your barbecue recipe, understanding sales tax in the Volunteer State can be a bit of a jig. But don't fret!

With this guide, we'll dance through important contacts, explore the concept of nexus, register for sales tax, collect what's due, file and pay those taxes, and even learn how to avoid common mistakes. By the end, you'll be playing the Tennessee sales tax tune like a pro at the Grand Ole Opry!

 

 

 


Tennessee Sales Tax Contacts

Navigating the Tennessee sales tax landscape can feel like trying to find your way through the Smoky Mountains without a map. But don't worry, we've got your trail guide right here!

 

Who manages Tennessee sales tax and what is their contact information?

In the grand state of Tennessee, the Department of Revenue is the sheriff in town when it comes to sales tax. They're the folks you'll want to reach out to for all your sales tax needs. Think of them as your go-to tax troubadours, ready to help you harmonize your tax duties.

Here's how you can get in touch with them: 

 

Mailing Address

Tennessee Department of Revenue

Andrew Jackson State Office Building

500 Deaderick Street, Nashville, TN 37242

Phone Numbers

(615) 253-0600

Website

Tennessee Department of Revenue

 

Remember, the Tennessee Department of Revenue is your partner in this sales tax dance. Don't hesitate to reach out to them with your questions and concerns. They're here to help you stay in step with your tax obligations.

 

Do You Have Nexus in Tennessee?

Have you ever heard of nexus? No, it's not a new country hit topping the charts in Nashville. In the world of sales tax, nexus is a legal term that refers to the requirement for businesses to collect and pay tax in a particular state. Let's strum through the different types of nexus and see which ones strike a chord in Tennessee.

 

What Creates Sales Tax Nexus in Tennessee?

In Tennessee, several factors can create tax nexus. Picture these as the strings on a guitar, each one contributing to the overall sound—or in this case, your overall tax obligations.

 

What creates physical nexus in the state of Tennessee?

If your business has a physical presence in Tennessee—like a brick-and-mortar store, office, or warehouse—that's as clear a sign of physical nexus as the Grand Ole Opry is a landmark of Nashville. Even if you have employees or sales representatives in the state, physical nexus could apply.

 

What creates economic nexus in the state of Tennessee?

Economic nexus in Tennessee is like a catchy tune—it can reach far and wide. If your business makes over $500,000 in sales to Tennessee customers within a 12-month period, it's hit the economic nexus threshold and will need to collect and remit sales tax.

 

What creates affiliate nexus in the state of Tennessee?

Affiliate nexus is like a duet: if your business is linked to another business in Tennessee that helps you establish or maintain a market in the state, that's affiliate nexus.

 

What creates click-through nexus in the state of Tennessee?

Click-through nexus is the digital-age equivalent of a handshake deal at the country fair. If a Tennessee resident refers customers to your business through a link on their website, and you make over $10,000 in sales through these referrals within a 12-month period, you've got click-through nexus.

 

What creates marketplace nexus in the state of Tennessee?

If you're selling goods through a marketplace provider like Amazon or Etsy, that's like setting up shop at a big ol' Tennessee flea market. As of 2021, marketplace providers are responsible for collecting and remitting sales tax on behalf of their third-party sellers, creating what's known as marketplace nexus.

 

Does Tennessee have use tax laws?

Just like sweet tea goes hand-in-hand with a hot Tennessee day, use tax complements sales tax in the state. Purchased items for use, storage, or consumption in Tennessee that weren't taxed at the point of sale should be subject to use tax. So, if you bought a guitar in a state with no sales tax but strum it in Tennessee, you'd need to pay the use tax.

 
 
 
 

 

 

Tennessee Sales Tax Registration

Just like signing up for a square dance, registering for sales tax in Tennessee is a necessary step—and don't worry, we'll guide you through the steps of this dance!

 

How to Register for Sales Tax in Tennessee

Registering for sales tax in Tennessee is a bit like learning a new line dance. It might seem complicated at first, but once you get the hang of it, you'll be gliding through with ease. Here are the steps you'll need to follow:

  1. Determine if you have sales tax nexus in Tennessee: We've already strummed through this tune, but it's worth repeating. If you have physical, economic, affiliate, click-through, or marketplace nexus in Tennessee, you'll need to register for sales tax.

  2. Gather necessary information: Before you start, gather all the necessary information like your Social Security number or federal Employer Identification Number (EIN), business name, business address, and the details about what products or services you sell.

  3. Visit the Tennessee Taxpayer Access Point (TNTAP): This is the stage where you'll perform your registration dance. Visit the Tennessee Department of Revenue's online portal, known as TNTAP.

  4. Register for a sales tax permit: On the TNTAP website, you'll need to create an account and fill out the online application for a sales tax permit. It's like filling out a dance card—make sure to fill in each step accurately.

  5. Wait for your sales tax permit to arrive: After you've submitted your application, it's waiting time. But don't worry, you won't be left waiting in the wings for long. You should receive your sales tax permit within a few weeks.

Once you've completed these steps, you'll be ready to collect sales tax on all your sales in Tennessee. Congratulations, you've mastered the registration dance!

 

How Much Does it Cost to Register for a Tennessee Sales Tax License?

Good news! Registering for a Tennessee sales tax license is like a free dance lesson—it doesn't cost a dime! That's right, there's no fee to register for a sales tax license in Tennessee.

 

Do I Need a Federal Tax ID Number or EIN to Register for a Tennessee Sales Tax License?

Yes, just like you need a partner to square dance, you'll need a Federal Tax ID number or EIN to register for a sales tax license in Tennessee. It's one of the key pieces of information you'll need to provide during the registration process.

 

Which Agencies in Tennessee Might I Need to Register With Additionally?

While the Department of Revenue is your main dance partner in Tennessee, you may need to register with other agencies depending on the nature of your business. For example, if you have employees in Tennessee, you'll also need to register with the Tennessee Department of Labor and Workforce Development. And if you're forming a corporation or LLC, you'll need to check in with the Tennessee Secretary of State. It's like a grand ball—there might be more than one partner you'll need to dance with!

 

 

Collecting Sales Tax in Tennessee

Collecting sales tax in Tennessee is like playing a fiddle—you need to know the right notes to hit. Let's explore the ins and outs of collecting sales tax, exemptions, and how to handle special situations in the Volunteer State.

 

Is Tennessee an Origin or Destination Sales Tax State?

In the world of sales tax, there are two types of states: origin-based and destination-based. Tennessee is a destination-based sales tax state, which means that the sales tax rate is determined by the location of the buyer, not the seller. It's like delivering a homemade apple pie to your neighbor—the tax rate is based on where the pie ends up, not where it was baked.

 

What Sales are Subject to Sales Tax in Tennessee?

In Tennessee, sales tax generally applies to the sale of tangible personal property (like that shiny new guitar you've had your eye on) and certain services (like a professional guitar lesson). So, when you're selling goods or services in Tennessee, keep in mind that most of them will be subject to sales tax.

 

Is Software as a Service (SaaS) taxed in Tennessee?

In Tennessee, SaaS is like a catchy new tune—it's also subject to sales tax. So, if you're selling software as a service to Tennessee customers, be prepared to collect sales tax on those transactions.

 

What is Exempt from Tennessee Sales Tax?

Just like a rousing rendition of "Rocky Top," there are some things that are exempt from sales tax in Tennessee. Examples of tax-exempt items include:

  • Prescription medications

  • Newspapers

  • Certain agricultural products

  • Some manufacturing machinery and equipment

 

Who is Eligible for Tennessee Sales Tax Exemptions?

In Tennessee, certain organizations and individuals may be eligible for sales tax exemptions. Examples include:

  • Nonprofit organizations with a 501(c)(3) status, such as churches and charities

  • Government agencies

  • Schools and educational institutions

 

What Should I Do If My Customer is Exempt from Sales Tax in Tennessee?

If you're selling to a customer who's exempt from sales tax in Tennessee, it's essential to obtain proper documentation, like a sales tax exemption certificate. Think of it as a backstage pass to tax-free transactions. Make sure to keep these certificates on file, as the Department of Revenue may request them during an audit.

 

What Happens If I Lose a Tennessee Sales Tax Exemption Certificate?

Losing a sales tax exemption certificate is like misplacing your favorite cowboy hat—you'll want to replace it as soon as possible. If you lose a certificate, reach out to your customer and ask for a duplicate. Keeping accurate records is crucial to staying on the right side of Tennessee sales tax law, so make sure you've got those exemption certificates safe and sound.

 

 

Filing and Paying Sales Taxes in Tennessee

Filing and paying your sales taxes in Tennessee doesn't have to feel like singing the blues. With a bit of guidance, you can hit all the right notes without missing a beat. Let's dive in!

 

When to File and Pay Sales Tax in Tennessee

In the world of sales tax, timing is everything. Tennessee requires businesses to file and pay sales tax on a monthly or quarterly basis, depending on their sales volume. Think of it like setting the tempo for a country song—the more sales you make, the faster your filing tempo will be.

 

The filing frequency and dues dates are as follows:

Monthly Filing

All sales tax licenses initially default to monthly filing upon set up. 

Due on the 20th of the month following the reporting period.

Quarterly Filing

Taxpayers whose sales and use tax liability for 12 consecutive months has averaged $1,000 or less per month are authorized to file monthly or quarterly

Due on the 20th of the month following the end of the quarter (April 20, July 20, October 20, and January 20).

Annual Filing

Marketplace sellers with a physical presence such a storefront, employees, or operations located in Tennessee is required to register for sales and use tax in Tennessee.

If all of its sales are made through marketplace facilitators that collect and remit Tennessee tax, the marketplace seller may request annual tax return filing status and report $0 sales on the return.

Due on January 20 of the following year.

 

What if a Tennessee Sales Tax Filing Date Falls on a Weekend or Holiday?

If a Tennessee sales tax filing date falls on a weekend or holiday, don't worry—you won't have to cut your weekend fishing trip short. Like a post-holiday extension on your belt buckle, Tennessee extends the due date to the next business day.

 

How Do I File a Tennessee Sales Tax Return?

Filing a Tennessee sales tax return is like writing a hit song—you've got to get every detail just right. Here's a detailed walkthrough of how to hit all the right notes:

  1. Gather all your records: Just like a songwriter needs their lyrics, you'll need your sales records. Make sure to gather all the necessary information, including total sales, taxable sales, and the amount of tax collected.

  2. Log in to the Tennessee Taxpayer Access Point (TNTAP): Remember TNTAP, where you registered for your sales tax permit? You'll be back there to file your sales tax return. It's like the recording studio for your tax returns.

  3. Select the "File Return" option: Once you're logged in to TNTAP, select the "File Return" option. This will take you to the online sales tax return form.

  4. Fill out the sales tax return form: The sales tax return form is like sheet music—you'll need to fill in every note (or field) accurately. Make sure to include all the necessary information from your sales records.

  5. Review and submit your sales tax return: Before you hit the "submit" button, review your sales tax return carefully, just like you would before releasing a new song. If everything looks good, submit the return.

  6. Pay your sales tax: After you've submitted your return, it's time to pay your sales tax. You can pay directly through TNTAP using a bank account or credit card.

  7. Keep a copy of your return: After you've filed and paid, make sure to save a copy of your return for your records. It's like keeping a copy of your first gold record—you never know when you might need to refer back to it!

 

What are the various penalties that can be assessed for sales tax filing in Tennessee?

There are a few different penalties that can be assessed for sales tax filing in Tennessee, like playing a sour note in the middle of a performance. These include:

  • Late filing and payment penalty: This is 5% per month of the tax due, up to a maximum of 25%. It's assessed if you file your return or make your payment after the due date.

  • Negligence penalty: This 10% penalty can be assessed if you underreport your taxable sales or overreport your deductions due to negligence.

Does Tennessee offer any sales tax incentives?

Tennessee does offer some sales tax incentives, like a surprise encore at a country music concert. These include exemptions and tax credits for certain types of businesses and activities, such as manufacturing, green energy production, and job creation. It's always worth checking to see if your business could be eligible for any of these incentives.

 

5 Tips to Avoid Common Mistakes When Filing Tennessee Sales Tax Returns

Filing sales tax returns can be as tricky as trying to fry up catfish in a hot skillet without a splatter screen. But just like the right tools can keep you from getting burned, these five tips can help you avoid common mistakes when filing your Tennessee sales tax returns.

  1. Stay Organized: Keep track of all your sales records and documentation, just like a well-tuned banjo. Organization is key to ensuring you have all the information you need when it's time to file.

  2. Know Your Deadlines: In the world of sales tax, timing is everything. Mark your calendar with your filing deadlines to ensure you never miss a beat.

  3. Double-Check Your Numbers: Even the best musicians sometimes hit a wrong note. Always double-check your figures before submitting your return to avoid any potential errors.

  4. Keep Up with Changes in Tax Law: Tax laws can change as often as the Nashville skyline. Stay up-to-date with the latest rules and regulations to ensure you're always playing the right tune.

  5. Seek Professional Help if Needed: If you're feeling as lost as a tumbleweed in a tornado, don't hesitate to seek help from a tax professional. Sometimes, a little expert advice can go a long way in avoiding mistakes.

 

Just like a great country song, a successfully filed sales tax return is all about paying attention to the details. Follow these tips, and you'll be on your way to hitting all the right notes.

 
 
 
 

Conclusion

Navigating the world of Tennessee sales tax can feel like learning a complicated dance routine, but with the right guidance, you can master every step. From understanding tax rates and exemptions to filing and paying on time, it's all about staying in tune with the beat.

Remember to stay organized, double-check your work, and keep up with changes in tax law. And when you need help, don't hesitate to reach out to a tax professional or the friendly folks at Accountingprose. Together, we'll make sure you're always in perfect harmony with the Tennessee sales tax two-step.

Happy filing, and here's to your business's success in the Volunteer State!

 


 

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Have sales tax in more than one state?

Check out All of our Sales Tax Guides

Alabama Sales Tax Guide

Hawaii Sales Tax Guide

Massachusetts Sales Tax Guide

New Mexico Sales Tax Guide

South Dakota Sales Tax Guide

Alaska Sales Tax Guide (N/A)

Idaho Sales Tax Guide

Michigan Sales Tax Guide

New York Sales Tax Guide

Tennessee Sales Tax Guide

Arizona Sales Tax Guide

Illinois Sales Tax Guide

Minnesota Sales Tax Guide

North Carolina Sales Tax Guide

Texas Sales Tax Guide

Arkansas Sales Tax Guide

Indiana Sales Tax Guide

Mississippi Sales Tax Guide

North Dakota Sales Tax Guide

Utah Sales Tax Guide

California Sales Tax Guide

Iowa Sales Tax Guide

Missouri Sales Tax Guide

Ohio Sales Tax Guide

Vermont Sales Tax Guide

Colorado Sales Tax Guide

Kansas Sales Tax Guide

Montana Sales Tax Guide (NA)

Oklahoma Sales Tax Guide

Virginia Sales Tax Guide

Connecticut Sales Tax Guide

Kentucky Sales Tax Guide

Nebraska Sales Tax Guide

Oregon Sales Tax Guide (N/A)

Washington Sales Tax Guide

Delaware Sales Tax Guide (N/A)

Louisiana Sales Tax Guide

Nevada Sales Tax Guide

Pennsylvania Sales Tax Guide

West Virginia Sales Tax Guide

Florida Sales Tax Guide

Maine Sales Tax Guide

New Hampshire Sales Tax Guide (NA)

Rhode Island Sales Tax Guide

Wisconsin Sales Tax Guide

Georgia Sales Tax Guide

Maryland Sales Tax Guide

New Jersey Sales Tax Guide

South Carolina Sales Tax Guide

Wyoming Sales Tax Guide

 

And don't forget to check out our blog about Economic Nexus, which serves as an invaluable resource for businesses who have sales that are subject to sales tax. 

 

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This blog is for informational purposes only and the information is accurate as of 2023-06-19. If you want legal advice on sales tax law for your business, please contact a State and Local Tax (SALT) professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog possibly may be out of date by the time you review it.

 

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