Currently, only out-of-state retailers with a physical presence, including personnel, in Tennessee are considered to have a "nexus" with the state. This means they are required to collect and remit sales or uses tax on all sales, whether orders are taken in person, by phone, or by mail. But now, the department is presenting its own "bright-line test" and is looking to expand the standard for an economic nexus.
The department has proposed a new rule that declares a "substantial nexus to the state" for all out-of-state dealers with sales, through any means, exceeding $500,000 to Tennessee customers during a calendar year. Under the proposed new rule, dealers must register with the department by January 1, 2017 and "affirmatively acknowledge" they will be begin collecting and remitting these taxes to the department by July 1, 2017.
NOTE: Some online businesses are already voluntarily collecting and remitting sales taxes,
regardless of the new economic nexus monetary threshold in the proposed rule-making.
The Department of Revenue has set a hearing for August 8, 2016. Any interested parties are welcome to submit comments to the department and/or attend the hearing. Following the hearing, the department will take into consideration public comments and submit its final recommendations to the Tennessee Secretary of State. The rule must also be approved by the General Assembly's Joint Committee on Government Operations and the entire General Assembly.