Most businesses starting in Tennessee that are selling a product or offering certain services will need to register for a sales tax permit. This is commonly referred to as a seller’s permit, sales tax license, sales tax number, or sales tax registration.
Check out the rest of this guide to determine who needs a sales tax permit, what products and services are taxable, how to register for a permit, and reporting requirements.
Who needs a sales tax permit in Tennessee?
A business must register for a sales tax permit in Tennessee when:
- A business has economic nexus. Economic nexus means having a physical presence in the state, such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
- Making retail sales or selling taxable services in Tennessee.
- Employees (including sales representatives or agents) are working in Tennessee
- An online business located in Tennessee is selling taxable products to Tennessee residents
- A remote seller or an out-of-state business selling over $500,000 of taxable products and services to Tennessee residents
Tangible personal property is defined as items that can be seen, weighed, measured, felt, or touched. Pre-written computer software is also considered as well.
What products and services are taxable in Tennessee?
There are a few exceptions, but almost all physical products are taxable when sold at retail in the state of Tennessee. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Digital products are taxable in Tennessee.
Most services aren’t taxable in Tennessee, however, there are a few exceptions, some of which include:
- Short-term lodging
- Providing repair to tangible personal property or computer software
- Laundering or cleaning of any tangible personal property
- Installation of computer software
A full list of taxable services in Tennessee is available from the Department of Revenue (TNDOR).
How to register for a sales tax permit in Tennessee
Information needed to register includes:
- Projected annual sales
- Date business began
- Fiscal year-end date
- Physical and mailing address
- Federal Employer Identification Number (FEIN) from the IRS. The EIN is not be required if the business is a sole proprietor with no employees.
- Type of business entity: Sole Proprietorship, Partnership, Corporation, Limited Liability Company (LLC)
- Description of what products or services are being sold
- Name, address, SSN, phone number, and title of owners/officers/members
How much does a sales tax permit cost?
There is no cost for a sales tax permit in Tennessee.
How long does it take to get a sales tax permit?
Expect 1-2 business days to receive a sales tax permit when registering online or up to 2 weeks when applying by mail.
After registering, the Department of Revenue will send a Certificate of Registration that must be displayed at your business location.
Do you have to renew your Tennessee sales tax permit?
The sales tax permit is a one-time registration, and no renewals are needed. Be mindful that if any information about the business changes, such as the mailing address, additional locations, or change in ownership, those changes need to be updated with the Department of Revenue.
Sales tax reporting
How is sales tax collected?
When a business sells a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business who then sends it to the Tennessee Department of Revenue.
How much sales tax is charged?
The sales tax rate that is charged varies depending on the address of the business if the purchase is made in the store. When shipping in-state, the sales tax is based on the address of the purchaser.
In addition to the statewide tax, there are additional local option taxes that may be added by city and/or county governments. To find sales tax rates, see sales tax rates by address from the Tennessee Department of Revenue.
When are Tennessee sales tax returns due?
The Department of Revenue will determine a filing frequency based on the expected sales volume, which will be monthly, quarterly, or annually.
The deadlines for filings are the 20th day of the month following the reporting period unless the 20th falls on a weekend or federal holiday, which would move to the next business day. Penalties and interest will be assessed for late filings.
Even if the business had no sales during the reporting period, a filing is still required indicating no sales occurred.
Sales tax on purchases for resale
A business can purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or vendor to the retailer, who will then charge sales tax to the end-user of the item.
Wholesalers and distributors will require a sales tax number and a completed Tennessee Certificate of Resale (also referred to as a resale certificate or sales tax exemption certificate to document the items being purchased are for resale.
Businesses that sell less than $4,800 in taxable products or provide less than $1,200 in taxable services annually are not able to get a resale certificate. Instead, these businesses will pay sales taxes to their suppliers.
In addition to registering for a sales tax permit, there may be other business licenses needed before starting a business in Tennessee. Learn what business licenses are needed in Tennessee.
If you have questions about the sales tax permit, the Tennessee Department of Revenue has a Sales & Use Tax Guide, or they can be contacted by calling 800-342-1003.