Tennessee: Sales Tax Handbook
What constitutes sales tax nexus in Tennessee?
One of the more complicated aspects of Tennessee sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of Tennessee, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in Tennessee, the vendor must register for a Tennessee sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in Tennessee.
Sales Tax Nexus in Tennessee
According to the law of Tennessee, all retailers who have tax nexus can be defined having "corporate presence" in the state. A seller is considered to have "corporate presences" if they have any of the following within the state's boundaries:
An office or place of business(directly or through any subsidiary), any employee, independent contractor or other representative, any personal or real property, and leasing or renting any tangible property.
For additional details on sales tax nexus law in Tennessee, see the nexus information page from the Department of Revenue at http://www.salestaxsupport.com/sales-tax-information/sales-tax-by-state/overview-and-nexus/tennessee/
Taxation of Internet-Based Sales in Tennessee
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Generally, Tennessee does not charge sales tax on Internet-based transactions determined to have nexus within the state. This means that purchases from Amazon.com and other Internet-based retailers may be sales-tax-free.
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within Tennessee, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in Tennessee?
The folks at the sales tax compliance company Avalara are an approved Tennessee sales tax partner, and you can use their free Tennessee nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay Tennessee sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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