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Tennessee Sales Tax 2022 for Businesses: A Complete Guide

“The statewide sales tax for businesses in Tennessee is 7%” 

What Does The Sales Tax For Businesses In Tennessee Mean? 

The sales tax 2022 in Tennessee refers to the tax that is applied on the purchase of certain products and services. As a seller of taxable products or services, you represent the state of Tennessee by collecting tax from customers and remitting it to the proper tax authorities. Tennessee’s Department of Revenue is in charge of collecting sales and use taxes. 

The state of Tennessee owns any sales tax received from customers, not you. It is the job of the seller to keep all the taxes in track and collect them timely to comply with the state and municipal rules and regulations. Penalties and interest charges may be imposed if this is not done.

How Much Is The Sales Tax For Businesses In Tennessee? 

Tennessee enacted its first general state sales tax in 1947, and the rate has since climbed to 7%. In addition to these state sales taxes, there are also one or more local sales taxes and special district taxes in the list and each of which can range from 0% to 3%. Combined sales tax rates in Tennessee currently range from 7% to 10%, depending on the region of the sale.

Tennessee Sales TaxThreshold Limit
7%$100,000 economic sales threshold limit

Read More: Utah Sales Tax 2022 for Businesses: A Complete Guide

Do You Need To Collect Tennessee Sales Tax For Your Ecommerce Business? 

Sales tax is levied in Tennessee on the sale of tangible items and some services. The vendor has the biggest responsibility to collect the taxes from the buyers and further remit them to the Tennessee tax authority. You can start by focusing on the following three questions to check if you need to collect sales tax in Tennessee or not:

Do you have a Tennessee nexus?

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Do you sell taxable products or services to residents of Tennessee?

Do your customers have to pay sales tax?

If you are the one who says yes to these questions, your next step is to get registered with the state tax authorities, collect the sales tax, file returns timely, and remit the collectd money to the state tax authority. 

What Types Of Goods and Services Are Taxable Under Tennessee Sales Tax? 

Taxes on Transactions

Under the Tennessee law, most of the customers are exempt from paying sales tax. The most common examples are government agencies, nonprofit organisations, and merchants making a purchase of goods for resale purpose. A seller is required to collect a valid exemption from buyers for the validation of each exempt transaction. 

Taxes on Services

In general, the sales tax applies to the retail sale of tangible personal property as well as some services such as housing, telecommunications, and tangible personal property installation and maintenance. 

The sales tax also applies to the sale of some digital products, computer software, and warranty contracts covering tangible personal property and computer software maintenance contracts, among other things.

Whether or not the tax is collected from the customer, the seller is responsible for it. The seller, on the other hand, has the option of collecting the tax from its customers. The total amount the seller expects to be paid for the goods or service is known as the sales price.

Tax Collection

Tennessee is a state with an origin-based sales tax. So, if you live in Tennessee, it’s rather simple to collect sales tax. The sale tax needs to be collected based on the rate that is applicable to that location. You’ll need to apply the correct rate to all taxable sales, remit sales tax, file timely returns with the TNDOR, and keep great records once you’ve successfully registered to collect Tennessee sales tax.

Tax Filing

You’ve filed a sales tax registration with the Tennessee Department of Revenue and started collecting sales tax. Remember that those tax funds aren’t yours. As a representative of the state of Tennessee, your job is to act as a middleman between taxpayers and tax officials.

The filing of a Tennessee sales tax return consists of two steps: filing a return and remitting the collected tax dollars to the Tennessee Department of Revenue. Whoever is involved in the tax filing process has to determine the total state sales, the total tax amount received, and sale location. 

How Often Do You Need To File Tennessee Sales Tax Return? 

It’s critical to understand the due dates associated with the Tennessee Department of Revenue’s filing frequency allocated to your company. All the relevant information in place will help you prepare well and plan for submitting taxes timely. If you miss to file the taxes before the specific deadline, paying for the late fees becomes mandatory. 

All sales tax filings must be completed by the 20th day of the month after the end of the reporting period, according to the TNDOR. For your convenience, we’ve organised Tennessee sales tax filing deadlines by filing frequency. In case, if the due date of filing the returns come on weekend or holiday, then it can be rescheduled for the next coming working day. 

What If You Fail To File Your Tax Return Before The Due Date?

Failure to submit returns and remit collected tax on time may result in penalties and interest charges; the longer you delay to file, the higher the penalty and interest will be. If you’re thinking about acquiring a business in Tennessee , it’s a good idea to contact the TNDOR and ask about the current status. You’ll be responsible for all outstanding Tennessee sales and use tax liabilities once you’ve purchased the company.

Assisting eCommerce Businesses With Tennessee Sales Tax Concerns!
If you have an eCommerce business in Tennessee, take your next step towards benefiting with tax deductions with FreeCashFlow. We offer the best assistance to businesses dealing with accounting and tax concerns. From cloud-based bookkeeping to algorithm tax planning to monthly reporting updates, we handle everything the best way so you can better concentrate on your business growth.

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