Learn more about keeping your business compliant with sales tax requirements.
In Tennessee, the retailers' sales and use tax is imposed on the privilege of selling tangible personal property at retail or storing such property for use or consumption in the state. It includes the renting and leasing of property.
The sales and use tax is imposed on every person who:
Tennessee imposes sales and use tax on the following services:
The Tennessee sales and use tax rate is generally 7 percent except for groceries taxed at 5.5 percent. In addition, make sure you contact your local governments in Tennessee because they are allowed to assess a local sales and use tax. The following rates are for the specific item types:
In Tennessee, the sales tax is imposed on the privilege of engaging in the business of selling at retail or leasing tangible personal property in the state. Although sellers are liable for the tax, they are required, insofar as can be done, to collect the tax from the consumer. Sellers must indicate to their customers whether they are paying any sales tax by posting a sign or by a statement on the receipt.
In Tennessee each place of business must obtain a certificate of registration from the Tennessee Commissioner. No fee is required for the certificate of registration.
Absorbing the tax is permitted. It is against Tennessee law to refund or offer to refund all or any part of the amount collected, or to absorb the amount of sales tax required to be added to the sales price and collected from the purchaser. As a seller, it is also against the law for you to advertise directly or indirectly that you will absorb the sales tax that is required to be added to the sales price.
Tennessee has many specific items that are exempt from sales tax. For example, certain prescription medications are exempt from Tennessee sales tax. You'll want to check and see if items that you purchase or sell are exempt from the sales tax.
An exemption certificate may be issued by a purchaser of a nontaxable item. The exemption certificate may be based on the type of transaction (such as a resale exemption) or on the item itself.
Sales made under a certificate of resale are not subject to the sales tax. Sellers must obtain a certificate of resale from the purchaser or they must collect the sales tax. The Commissioner may revoke the seller's registration certificate and assess the sales or use tax on the seller if the seller knew, or should have known, that the merchandise obtained with the certificate was not the sort the buyer normally sold in the usual course of business.
Resale exemption certificate requirements. You may use the Tennessee Blanket Certificate of Resale or the Multistate Tax Commission's uniform sales and use tax certificate. Buyers may claim the resale exemption by providing a seller with a resale certificate that includes:
Sellers may accept blanket certificates from a purchaser who repeatedly purchases the same type of property or service for processing or resale. However, blanket certificates may not be used to purchase property or services not covered by a blanket certificate. The Tennessee Blanket Certificate of Resale that includes the information noted above for a resale certificate is used by purchasers to claim the resale exemption.
You will be responsible for paying sales tax only if you have physical presence within Tennessee. To determine if you have physical presence, ask yourself the following:
Sellers are required to collect the 7 percent tax according to a bracket system. Under the system, no tax is collected on a sale of less than 11 cents. The state makes rate charts available for the rates that are in effect, which include various local taxes.
If your customer returns property after the sales or use tax has been paid, you may deduct the sale price from the gross proceeds shown on the report for the current month. If a mistake is made on the sales tax report The Commissioner of Revenue will refund a qualified claim up to three years from December 31 of the year in which the tax was paid.
Tennessee imposes a use tax is imposed on the privilege of using, consuming, distributing, or storing tangible personal property in Tennessee. When applied together, the sales and use taxes provide a uniform tax upon either the sale or use of taxable goods and services in Tennessee, regardless of where they are purchased. Property brought into Tennessee on which a sales or use tax has been paid in another state equal to or in excess of the Tennessee tax is not subject to tax in Tennessee.