Following the South Dakota v. Wayfair, Inc. decision, almost every state has adjusted its sales tax nexus. The Tennessee economic nexus is no exception. Initially, Tennessee required remote sellers with $500,000 or more in sales to Tennessee customers to register and collect Tennessee sales and use tax. However, as of October 1, 2020, the threshold decreased to $100,000. Below, we have highlighted several of the key points for remote sellers and marketplace facilitators.
October 1, 2019; threshold change effective October 1, 2020.
Threshold applies to the previous 12 months.
Retail sales to individuals, businesses, organizations, and any other purchaser, whether the sale is taxable or exempt.
When You Need to Register Once You Exceed the Threshold:
The first day of the third month following the month in which the threshold is met. For example, if a seller meets the threshold on January 15, it must register, collect and remit sales tax beginning on April 1, for any sales made on and after April 1.
Summary: Tennessee has imposed sales tax obligations on remote sellers since October 2019. However, under Senate Bill (S.B.) 2932, the sales threshold for when economic nexus would apply was lowered from $500,000 to $100,000. At the same time, Tennessee adopted rules imposing sales tax obligations on marketplace facilitators for sales made by their users. Effective October 2020, both remote sellers and marketplace facilitators must register with the Tennessee Department of Revenue to collect sales tax for sales made in the state once they make $100,000 or more in sales.
“Beginning on October 1, 2020, marketplace facilitators that make or facilitate more than $100,000 in sales to Tennessee customers in the previous 12-month period are required to collect and remit Tennessee sales tax,” according to the Tennessee Department of Revenue. “The sales tax is collected on sales made by marketplace sellers to Tennessee customers. Marketplace facilitators that do not have at least $100,000 in total sales in this state do not have a collection responsibility.”
Tennessee Sales Tax Resources: Contact our team of experts for more information on the Tennessee economic nexus and how it has evolved. Also check out our interactive sales tax nexus map for real-time updates on every state.
Check out our workshop on how to file your Tennessee state sales tax return.