PDF Sales and Use Guide - Tennessee

Sales and Use Tax Manual

`

August 2022

1|P ag e

Contents

Chapter 1: Introduction.............................................................................................. 16 General Overview.......................................................................................................................................16 1. Administration...............................................................................................................................16 2. Transactions Subject to Sales & Use Taxes........................................................................... 16 3. Rates and Impositions.................................................................................................................17 4. Credits..............................................................................................................................................18 5. Exemptions.....................................................................................................................................19

Chapter 2: Nexus........................................................................................................ 20 Historical Overview....................................................................................................................................20 Tennessee Nexus Requirements...........................................................................................................21 1. Out-of-State Dealers with no Physical Presence in Tennessee...................................... 22 2. Local Sales Tax Reporting by Out-of-State Dealers............................................................ 22

Chapter 3: Administrative Requirements ................................................................... 24 Registration Generally ..............................................................................................................................24 Registration Process..................................................................................................................................25 1. Consumers or Business Users..................................................................................................25 2. Flea Market Operators & Dealers............................................................................................26 3. Revocation of Certificate of Registration............................................................................... 27 Filing and Payments..................................................................................................................................27 1. Filing through TNTAP...................................................................................................................27 2. Filing through an Approved Software Vendor..................................................................... 28 3. Filing through the Streamlined Central Registration System.......................................... 28 Filing Periods and Due Dates..................................................................................................................28 1. Filing Periods..................................................................................................................................28 2. Filing and Payment Due Dates..................................................................................................29

2|P ag e

1099-K Filing Requirement ......................................................................................................................29 Rules for Billing Sales Tax ........................................................................................................................ 30

1. Invoicing..........................................................................................................................................30 2. Installment or Credit Sales.........................................................................................................31 Refunds ......................................................................................................................................................... 31 1. Refund Requests Made by Dealers.........................................................................................31 2. Refund Requests Made by Customers................................................................................... 31 Statutes of Limitations..............................................................................................................................33 1. Assessments................................................................................................................................... 33 2. Refunds............................................................................................................................................ 33 3. Statute Waivers.............................................................................................................................34 Penalties........................................................................................................................................................ 34 1. Penalties and Penalty Rates......................................................................................................35 2. Penalty Waivers.............................................................................................................................35 Interest ..........................................................................................................................................................38 Records Maintenance...............................................................................................................................38 1. Records Requested......................................................................................................................38 2. Record Retention..........................................................................................................................40 3. Failure to Retain Records...........................................................................................................40 Assessment and Informal Conferences............................................................................................... 40 Change in Business Ownership and Closing Your Business......................................................... 41 Successor Liability......................................................................................................................................42 Responsible Person Liability ................................................................................................................... 43 Chapter 4: Common Sales Tax Concepts ..................................................................... 46 Overview ....................................................................................................................................................... 46 Commonly Used Terms in Sales Tax Law...........................................................................................46 1. Auctioneers, Agents, and Factors............................................................................................46 2. Business .......................................................................................................................................... 47

3|P ag e

3. Commissioner................................................................................................................................ 47 4. Dealer...............................................................................................................................................47 5. Leases and Rentals.......................................................................................................................49 6. Marketplace Facilitator ...............................................................................................................54 7. Person..............................................................................................................................................54 8. Resale...............................................................................................................................................55 9. Retail Sale........................................................................................................................................55 10. Retailer.............................................................................................................................................55 11. Sale.................................................................................................................................................... 55 12. Sales Price.......................................................................................................................................57 13. Specified Digital Product ............................................................................................................57 14. Tangible Personal Property ....................................................................................................... 58 15. Use....................................................................................................................................................58 Chapter 5: Sales Tax Imposition on Services and Tangible Personal Property.............. 60 Taxable Services.........................................................................................................................................60 1. Repair of Tangible Personal Property or Computer Software........................................ 61 2. Installation of Tangible Personal Property or Computer Software............................... 63 3. Lodging Services & Rooms.........................................................................................................64 4. Short-Term Space Rented by Dealers.....................................................................................67 5. Cleaning Tangible Personal Property ..................................................................................... 68 6. Parking and Storage of Motor Vehicles.................................................................................. 72 7. Telecommunications Services..................................................................................................73 8. Ancillary Services..........................................................................................................................74 9. Uranium Enrichment...................................................................................................................75 10. Television Programming Services............................................................................................75 Nontaxable Services in Connection with Real Property ................................................................. 75 Tangible Personal Property.....................................................................................................................76 1. Coins, Currency, and Bullion.....................................................................................................77

4|P ag e

Chapter 6: Use Tax ..................................................................................................... 78 Overview ....................................................................................................................................................... 78 1. Definitions.......................................................................................................................................78 2. Use Tax Imposition.......................................................................................................................79 Activities Subject to Use Tax...................................................................................................................79 1. Specified Digital Products and Video Game Digital Products......................................... 80 When Use Tax Does Not Apply...............................................................................................................80 1. Personal Items Moved into Tennessee.................................................................................. 81 2. Import for Export..........................................................................................................................81 3. Interstate Commerce - Title and Property Pass outside the State................................ 82 4. Storage of Tangible Personal Property.................................................................................. 82 5. Tangible Personal Property Held for Resale......................................................................... 83 Contractor's Use Tax.................................................................................................................................83 1. Contractor's Use Tax....................................................................................................................83 2. Contractor-Dealers.......................................................................................................................84 3. Exemptions.....................................................................................................................................84 4. Tax on Fabricated Materials......................................................................................................87 5. Installation of Industrial Machinery ........................................................................................87 6. Property Owned by the United States Government.......................................................... 88 7. Qualified Disaster Restoration..................................................................................................88 Credit for Taxes Paid in another State.................................................................................................90

Chapter 7: Local Sales Tax Imposition......................................................................... 91 Overview ....................................................................................................................................................... 91 Local Tax Limitations.................................................................................................................................91 Local Option Tax Rates.............................................................................................................................92 Local Sourcing Rules..................................................................................................................................92 1. Sales at Special Events................................................................................................................93 2. Food Trucks....................................................................................................................................93

5|P ag e

Single Article ................................................................................................................................................94 Chapter 8: Single Article ............................................................................................. 95

Overview ....................................................................................................................................................... 95 Single Article Local Tax.............................................................................................................................95

1. Local Tax Base Limitations.........................................................................................................95 2. Reporting Local Single Article Sales ........................................................................................97 State Single Article Tax..............................................................................................................................97 1. Reporting State Single Article Sales Tax................................................................................. 97 Example Calculations................................................................................................................................97 Single Article: Lease or Rental of Tangible Personal Property...................................................... 98 Single Article: Software.............................................................................................................................99 Single Article Application to Sales of Boats and Trailers ..............................................................100 1. Applying the Single Article Cap and the State Single Article Tax..................................100 2. Examples.......................................................................................................................................101 Motor Vehicles ..........................................................................................................................................103 Manufactured Homes.............................................................................................................................104 Tractors.......................................................................................................................................................104 Chapter 9: Marketplace Facilitators ......................................................................... 106 Background................................................................................................................................................106 1. Marketplace Facilitators and Marketplace Sellers............................................................106 2. When Must a Marketplace Collect Tennessee Sales Tax? ..............................................109 3. Exceptions to Marketplace Facilitator Collection Requirement....................................109 4. Delivery Network Company Election....................................................................................111 Marketplace Facilitator Administration.............................................................................................111 1. Sourcing Sales Made through Marketplace Facilitator....................................................111 2. Facilitated Sales Must be Reported Separately .................................................................112 3. Auditing a Marketplace Facilitator.........................................................................................112 4. Taxpayers are also required to maintain exemption and resale certificates. Purchases for Resale...........................................................................................................................113

6|P ag e

5. Claims for Refund.......................................................................................................................115 Chapter 10: Sales Price (Purchase Price) and Bundled Transactions.......................... 116

Sales Price (Purchase Price)...................................................................................................................116 1. Consideration..............................................................................................................................117 2. Miscellaneous Taxes Listed on Invoice................................................................................118 3. Federal Excise Taxes..................................................................................................................119 4. Finance/Carrying Charges........................................................................................................120 5. Late Charges................................................................................................................................120 6. Delivery Charges.........................................................................................................................121 7. Installation Charges...................................................................................................................125 8. Services Necessary to Complete Sale...................................................................................125 9. Trade-in Credit.............................................................................................................................126 10. Discounts.......................................................................................................................................126

Bundled Transactions and the True Object Test ............................................................................128 1. True Object Test Application...................................................................................................129 2. Examples of True Object Test.................................................................................................130

Chapter 11: Tangible Personal Property vs. Realty.................................................... 132 Realty vs Tangible Personal Property.................................................................................................132 1. Intent of the Parties...................................................................................................................132 2. Objective Factors........................................................................................................................133 Restaurant Equipment............................................................................................................................137 Pipeline and Railroad Components....................................................................................................138 1. Installation of Pipelines.............................................................................................................138 2. Installation of Railroads............................................................................................................139 3. Unattached Pipeline and Railroad Components...............................................................139 Fiber-Optic Cable......................................................................................................................................139

Chapter 12: Computer Software ............................................................................... 140 Historical Overview..................................................................................................................................140

7|P ag e

Sale of Computer Software...................................................................................................................140 1. Computer Software....................................................................................................................141 2. Remotely Accessed Software..................................................................................................142

Sales Price/Purchase Price of Computer Software........................................................................143 Services........................................................................................................................................................144

1. Nontaxable Services..................................................................................................................144 2. Installation and Repair Services.............................................................................................145 3. Computer Software Configuration and Training...............................................................145 Single Article ..............................................................................................................................................146 1. In-house Computer Software..................................................................................................147 2. Video Game Digital Products..................................................................................................148 Use of Computer Software....................................................................................................................148 1. Allocation of Purchase Price (Users Located in Multiple States)..................................149 2. Purchases with Resale Certificate..........................................................................................150 3. Remotely Accessed Software Direct Pay Permit ...............................................................150 4. Remotely Accessed Software Used to Fabricate Software for Personal Use is Exempt.....................................................................................................................................................151 Computer Software Maintenance Contracts...................................................................................151 1. Definition of Computer Software Maintenance Contract ..............................................151 2. Computer Software Maintenance Contracts Are Subject to Both Sales and Use Tax

152 3. Separate Sales of Support Services.......................................................................................153 4. Single Article Tax Limitation Does Not Apply to Computer Software Maintenance Contracts.................................................................................................................................................154 5. Software Installed on Computers Both Inside and Outside the State........................154 6. Repairs...........................................................................................................................................155 Chapter 13: Specified Digital Products...................................................................... 156 Specified Digital Products......................................................................................................................156 1. Electronically Transferred........................................................................................................156

8|P ag e

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download