Tennessee Sales Tax Guide for Businesses
- Sales Tax Rate
- Local Taxes
- Department of Revenue
- Tax Line
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
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:
- Login to Amazon Seller Central and pull your inventory report
- 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%|
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.
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.
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.
Caption: Top 20 most populous cities in Tennessee and their sales tax rates
When are Tennessee Sales Tax Returns Due?
Tennessee sales tax returns are always due the 20th of the month following the reporting period. You’ll be assigned a sales tax filing frequency when you apply for your Tennessee sales tax permit.
To break it down:
2016 Tennessee Monthly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|January||February 22, 2016*|
|February||March 21, 2016*|
|March||April 20, 2016|
|April||May 20, 2016|
|May||June 20, 2016|
|June||July 20, 2016|
|July||August 22, 2016*|
|August||September 20, 2016|
|September||October 20, 2016|
|October||November 21, 2016*|
|November||December 20, 2016|
|December||January 20, 2017|
2016 Tennessee Quarterly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Q1 (Jan - Mar)||April 20, 2016|
|Q2 (Apr - Jun)||July 20, 2016|
|Q3 (Jul - Sep)||October 20, 2016|
|Q4 (Oct - Dec)||January 20, 2017|
2016 Tennessee Annual Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Year 2016||January 20, 2017|
|Year (Jul 2016 - Jun 2017)||July 31, 2017|
*indicates a due date pushed back due to a weekend or holiday
Click here for a chart of Tennessee sales tax filing due dates in 2016.
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:
- File online: File online at the Tennessee Department of Revenue. You can remit your payment through their online system. Check here for our step-by-step guide to filing your Tennessee sales tax return.
- File by mail: Fill out and mail Tennessee form SLS-450
- AutoFile: Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.
Other Facts You Should Know about Tennessee Sales Tax Filing
There are a few more things you should know about sales tax in Tennessee:
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.
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.
Only out-of-state-based sellers 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 2016:
July 29-31, 2016: 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.