Most tangible personal property is subject to sales tax. However, some necessities like food, clothing and medication are not taxable in some states. And sometimes states consider things like digital goods (eBooks, music, movies) and software-as-a-service (SaaS) taxable even though they can’t be touched or held.
Here’s how Tennessee taxes the most commonly sales tax exempt items:
Do I need a Tennessee sales tax permit if I only sell temporarily in the state?
Yes, all sellers making sales in the state, even temporarily such as at a craft fair or flea market, must register and collect Tennessee sales tax.
How to Collect Sales Tax in Tennessee
I’m in Tennessee. How do I collect sales tax from my Tennessee buyers?
Tennessee is one of a handful of states with origin-based sales tax sourcing for in-state sales. This means that sales tax is charged at the rate of the location where the order originates. (That simply means the rate from where the item is sold/shipped.)
So if your online store’s headquarters is located in Tazewell, Tennessee and you make a sale to a buyer in Knoxville, Tennessee then you’d charge the sales tax rate at the location where the order originated. In this case, that is your HQ in Tazewell.
To sum it up, if a sale is sourced from a location in Tennessee, then you’d charge the sales tax rate at the location where the order originated.
I’m not in Tennessee but have sales tax nexus there. How do I collect sales tax from Tennessee buyers?
For interstate sales, Tennessee is a destination-based sales tax sourcing state. So if you are located in South Dakota but make a sale to a buyer in Tennessee, then you would charge the sales tax rate at your buyer’s location in Tennessee.
This is with the exception of digital products, which are subject to the 7% Tennessee state rate plus a 2.5% local rate across the board.
Should you collect sales tax on shipping charges in Tennessee?
Yes. Shipping charges are subject to sales tax in Tennessee.
I didn’t collect any Tennessee sales tax this period. Do I still need to file a return?
Yes. You should still file a “zero” return with the state even if you didn’t collect any sales tax over the taxable period.
What is the penalty for filing and/or paying Tennessee sales tax late?
The penalty for both failing to file and pay Tennessee sales tax is the great of 5% of tax due per 30 days or fraction (maximum 25%) or $15.
Can I amend a Tennessee sales tax return?
Yes, you can amend a previously filed return in TNTAP by logging in and following these steps:
Click View/FIle returns next to the account
Click the “View or Amend Return” link
Click the “Amend link”
How often will I be required to file and pay sales tax in Tennessee?
Tennessee assigns taxpayers sales tax filing frequencies of either monthly, quarterly or annually. The more sales you make into Tennessee and the more sales tax you collect, the more often you’ll be required to pay.