State Sales Tax Nexus and General Overview

Need to Understand a State's Sales Tax Situation? Here it is...

Brought to you by:

Tennessee (TN)

TN Sales Tax - Name of Tax and General Application:

Tennessee imposes a tax on the privilege of selling tangible personal property at retail and performing certain services in the state. This tax is known as a "sales tax". In addition there is a tax imposed on use, storage or consumption of tangible personal property purchased at retail within the state. This tax is known as a "use tax" and only applies where sales tax has not been paid.

TN Nexus - General Requirements:

The word "nexus" means a link or connection. If you are determined to have nexus to a U.S. state then you are subject to that state's sales and use tax rules and must collect and remit sales tax to the state. This is known as a "filing obligation."

Each state has a different definition of nexus. However, if the answer to any of the following questions is yes, it is likely that a company has nexus as legally defined in most U.S. States.

Does the company own property in the state? Does the company have employees living in the state? Does the company regularly send employees in the state to perform services? Does the company have an agent acting on behalf of the company in the state?

Tennessee imposes nexus on in-state promotions, including participation in trade shows, providing telecommunication services to subscribers in the state, or providing any taxable service in the state. However, leased equipment generally does not create nexus in Tennessee.

TN Local Tax - Do Localities Impose Tax?

Yes, Tennessee imposes local sales tax.

TN Resale Certificate Renewal Agreements:

Sales for resale are not taxable and are excluded from the taxable definition of "retail sale." An exemption certificate is required.

TN Resale Certificate Renewal Periods

No specific expiration period is given.

TN Statute of Limitations

Three years from the end of the calendar year in which the return was filed.