State of Tennessee Flag

Tennessee Sales Tax Guide for Businesses

Sales Tax Rate
7.0%
Local Taxes
Yes
Website
Department of Revenue
Tax Line
615-253-0600

We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Tennessee, and if so, how best to tackle the sales tax situation in the Volunteer State.

After reading this, you’ll know:

  • Do you or don’t you need to collect Tennessee sales tax?
  • Which customers do you collect from?
  • How much do you collect?
  • What do you do with all the sales tax you’ve collected?
  • Way more than you probably ever wanted to know about Tennessee sales tax!

Do you have sales tax nexus in Tennessee?

Good news! You only have to begin thinking about Tennessee sales tax if you have sales tax nexus in Tennessee.

“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.

Tennessee considers a seller to have sales tax nexus in the state if you have any of the following in the state:

  • “Corporate Presence”
  • An employee present in the state
  • Lease or rental of tangible personal property
  • Ownership of real or personal property
  • Independent contractors or other representatives in Tennessee

You can click here to read exactly what the Tennessee Department of Revenue (Tennessee’s taxing authority) has to say about what constitutes sales tax nexus in Tennessee.

Do you have sales tax nexus in Tennessee if you sell on FBA?

If you sell on Amazon FBA, you may have sales tax nexus in Tennessee. Storing physical products in a state can create sales tax nexus, and Tennessee is home to six Amazon Fulfillment Centers.

To determine whether or not you have items stored in an FBA warehouse in Tennessee, you can do one of two things:

  1. Login to Amazon Seller Central and pull your inventory report
  2. Sign up for a 30-day free trial of TaxJar and find out from where your Amazon inventory ships with our Amazon badge feature

You may find that your inventory is stored in one or all of Tennessee’s Amazon fulfillment centers in this list:

Warehouse Code Address County Tax Rate
BNA1 14840 Central Pike Lebanon, TN 37090 Wilson 9.75%
BNA2 500 Duke Drive Lebanon, TN 37090 Wilson 9.75%
BNA3 2020 Joe B Jackson Pkwy Murfreesboro, TN 37127 Rutherford 9.75%
CHA1 7200 Discovery Dr Chattanooga, TN 37421 Hamilton 9.75%
CHA2 225 Infinity Dr NW, Charleston, TN 37310 Bradley 9.75%

Read here for more about Amazon FBA and sales tax nexus. Here’s a list of all Amazon Fulfillment Centers in the country.

Is what you’re selling even taxable?

You’ve probably read this far because you realized you have sales tax nexus in Tennessee. Your next step is to determine if what you’re selling is even taxable.

Services in Tennessee are generally not taxable. So if you’re a consultant or an accountant, you’re in luck and you don’t have to worry about sales tax. But watch out – if the service you provide includes repairing, creating or installing a product, you may have to deal with the sales tax on products.

Tangible products are taxable in Tennessee , with a few exceptions. These exceptions include food, medical supplies, and packaging.

So if you sell books, then charge sales tax to your Tennessee customers.

But if you’re a freelance writer, don’t charge sales tax to your Tennessee customers.

If you have sales tax nexus in Tennessee and your products are taxable, your next step is to register for a sales tax permit.

How to Register for a Sales Tax Permit in Tennessee

Sellers with sales tax nexus in Tennessee must apply for a Tennessee sales tax permit.

Don’t skip this step! Many states consider it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Tennessee .

How to Collect Sales Tax in Tennessee

So you’ve determined that you have sales tax nexus in Tennessee and what you’re selling is taxable. And you’re all set and registered for your Tennessee sales tax permit.

The next step is to determine how much sales tax to collect.

The sales tax rate you collect in Tennessee depends on whether you are based in Tennessee or out-of-state.

How to Collect Sales Tax in Tennessee if You are Based in Tennessee

Tennessee is an origin-based sales tax state. So if you live in Tennessee, collecting sales tax is fairly easy. Collect sales tax at the tax rate where your business is located.

You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator or by going to TaxJar.com/mobile on your mobile device.

Example: Let’s say you run your business in Manchester, TN 37349, which has a sales tax rate of 9.75%. You sell to a customer in Franklin, TN 37064, which has a sales tax rate of 9.25%. Because Tennessee is an origin-based state, you would charge your customer your higher sales tax rate of 9.75%.

If you have more than one location in Tennessee, then you would base the sales tax rate you charge on the point of origin of your sale.

How to Collect Sales Tax in Tennessee if you are Not Based in Tennessee

This is where things get trickier for online sellers. Tennessee allows sellers to do one of two things. You can either collect the sales tax rate at the buyer’s ship-to address for all orders shipped to Tennessee (i.e. destination-based sourcing) or you can collect the 7% state rate and just add 2.25% to all purchases, meaning you would charge a flat 9.25% rate to all Tennessee buyers.

Example: You live in Kentucky, but have nexus in Tennessee. You ship to a customer in Jonesboro, TN 37659. You could either charge them the flat 9.25% sales tax rate or their actual sales tax rate of 9.5%.

What are the Amazon sales tax settings for Tennessee?

If you are an Amazon pro seller and use Amazon to collect sales tax, be sure you have your Tennessee sales tax settings entered correctly. Find step-by-step instructions for setting up your Amazon sales tax settings here.

If you are a… State tax County tax City tax District tax Custom rate Is shipping taxable? Is gift wrapping taxable?
Seller living in Tennessee X X X X Optional 9.25% Yes Yes
Seller living outside of Tennessee X X X X Optional 9.25% Yes Yes

Should you collect sales tax on shipping charges in Tennessee?

Shipping and handling is generally taxable in Tennessee. If the item you are shipping is taxable, then the shipping is taxable. If the item isn’t taxable, then the shipping isn’t taxable. If you are shipping a taxable and a non-taxable item, then the state requires that you to have a percentage of shipping charged for the taxable item. You can charge the percentage either on the price or the weight.

Read a full explanation of sales tax on shipping in Tennessee here.

Rank City Population County Total SalesTax
1 Memphis 655,155 Shelby 9.25%
2 Nashville 624,496 Davidson 9.25%
3 Knoxville 182,200 Knox 9.25%
4 Chattanooga 171,279 Hamilton 9.25%
5 Clarksville 142,519 Montgomery 9.50%
6 Murfreesboro 114,038 Rutherford 9.75%
7 Franklin 68,886 Williamson 9.25%
8 Jackson 67,265 Madison 9.75%
9 Johnson City 65,123 Sullivan 9.75%
10 Bartlett 55,945 Shelby 9.25%
11 Hendersonville 53,080 Sumner 9.25%
12 Kingsport 51,501 Hawkins 9.75%
13 Collierville 46,462 Shelby 9.75%
14 Cleveland 42,386 Bradley 9.75%
15 Smyrna 41,705 Rutherford 9.75%
16 Germantown 39,446 Shelby 9.75%
17 Brentwood 39,012 Williamson 9.25%
18 Columbia 34,901 Maury 9.25%
19 La Vergne 33,777 Rutherford 9.75%
20 Gallatin 31,603 Sumner 9.25%

Caption: Top 20 most populous cities in Tennessee and their sales tax rates

When are Tennessee Sales Tax Returns Due?

When you file and pay Tennessee sales tax depends on two things: your assigned filing frequency and your state’s due dates.

How often will you file sales tax returns in Tennessee?

States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Tennessee, you will be required to file and remit sales tax either monthly, quarterly, or annually (either fiscal annual or calendar annual).

How often you are required to file sales tax in Tennessee follows this general rule:

Average Monthly Tax Liability Filing Frequency
More than $200 (at state’s discretion) Monthly
More than $200 (at state’s discretion) Quarterly
$0 to $200.00 Annually

Tennessee sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.

2017 Tennessee Monthly Sales Tax Filing Due Dates

Taxable Period Due Date
*January February 21, 2017*
February March 20, 2017
March April 20, 2017
*April May 22, 2017*
May June 20, 2017
June July 20, 2017
*July August 21, 2017*
August September 20, 2017
September October 20, 2017
October November 20, 2017
November December 20, 2017
* December January 22, 2018*

*indicates a due date pushed back due to a weekend or holiday

2017 Tennessee Quarterly Sales Tax Filing Due Dates

Taxable Period Due Date
Q1 (Jan - Mar) April 20, 2017
Q2 (Apr-Jun) July 20, 2017
Q3 (Jul-Sep) October 20, 2017
*Q4 (Oct-Dec) January 22, 2018*

*indicates a due date pushed back due to a weekend or holiday

2017 Tennessee Fiscal Annual Sales Tax Filing Due Dates

Taxable Period Sales Tax Due Date
July 2016-June 2017 July 31, 2017

2017 Tennessee Annual Sales Tax Filing Due Dates

Taxable Period Due Date
*Year 2017 January 22, 2018*

*indicates a due date pushed back due to a weekend or holiday

Click here for more info on Tennessee sales tax filing due dates in 2017.

How to File Sales Tax in Tennessee

When it comes time to file sales tax in Tennessee you must do two things:

1.Calculate how much sales tax you owe 2.File a sales tax return 3.Make a payment

We’ll walk you through these steps.

How to Calculate How Much Sales Tax You Owe in Tennessee

Calculating how much sales tax you should remit to the state of Tennessee is easy with TaxJar’s Tennessee sales tax report.

All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Tennessee sales tax return will be waiting for you in TaxJar. All you have to do is login!

How to File and Pay Sales Tax in Tennessee

You have two options for filing and paying your Tennessee sales tax:

Other Facts You Should Know about Tennessee Sales Tax Filing

There are a few more things you should know about sales tax in Tennessee:

Penalties:

If you are filing state and local sales & use taxes late, you must pay a penalty of 5% of the tax for each 1 to 30 day period for which tax is delinquent, the total penalty not to exceed 25% of the tax. The minimum penalty is $15 regardless of the amount of tax or whether or not tax is due. If filed late, compute interest at 7.25% per annum on the tax.

Other penalties for fraud or serial offenses include higher penalties and even criminal charges.

“Zero returns”:

Tennessee requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay.

Discount:

Only out-of-state-based sellers who are registered through the Streamline Sales Tax Initiative and are filing voluntarily can take advantage of this discount, which is 2% of the first $2500 of sales tax due and 1.15% of the excess amount per reporting period.

Tennessee Sales Tax Holidays

Tennessee has a sales tax holiday in 2017:

July 28-30, 2017: Back to School Sales Tax Holiday

Check here for more information about Tennessee’s sales tax holidays including how to handle sales tax holidays as an online seller.

And that’s it. You’ve mastered Tennessee sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.

Tennessee Sales Tax Resources

For more about Tennessee sales tax, check out the Tennessee section of the TaxJar blog.

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