Tennessee Publishes Economic Nexus Guidance for Out-of-State Sellers

[June 10, 2019] Tennessee recently published new guidance on Sales and Use Tax Rule 1320-05-01-.129(2) regarding the taxation of out-of-state retailers. Out-of-state sellers with no physical presence in Tennessee who make sales exceeding $500,000 to consumers in Tennessee during the previous 12-month period must register with the Department and begin collecting and remitting Tennessee sales and use tax.

For purposes of applying the $500,000 threshold, dealers should include all retail sales, including exempt retail sales, but should exclude sales for resale. Out-of-state sellers who meet the threshold as of July 31, 2019 must register and begin collecting Tennessee sales and use tax by October 1, 2019. Out-of-state sellers who meet the threshold after July 31, 2019, are required to register and begin collecting sales and use tax on the first day of the third month following the month in which it meets the threshold.

The Department further clarified that out-of-state sellers will no longer be able to use the uniform local rate option of 2.25%. Instead, out-of-state dealers must apply the specific local sales tax rate in effect for the city or county jurisdiction into which the sale was shipped or delivered. 

Click here to see the published Tennessee economic nexus guidance.

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Author

Alex Samuel

Alex Samuel is a Junior Regulatory Counsel at Sovos Compliance. Within Sovos’ Regulatory Analysis function, Alex focuses on enterprise sales tax issues arising in various domestic and international jurisdictions. Prior to Sovos, Alex worked as an attorney at New Hampshire Legal Assistance. Alex is a member of the New Hampshire and Massachusetts Bars, earned his B.S. from the University of Minnesota and his J.D./LL.M from the University of New Hampshire School of Law.
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