Nashville, TN (615) 255-6143 and Tennessee Consumer Use Tax

Thanks to a new law passed by the Tennessee legislature on March 23, 2012, customers across Tennessee are receiving emails informing them of their potential Tennessee Consumer Use Tax liability.

The tax itself is not new.  Tennessee Consumer Use Tax has been around since 1947. When purchases are made online or over the phone from a seller that does not have a connection to (nexus) Tennessee, interstate commerce laws generally exempt the seller from collecting sales tax.  However, Tennessee consumers are responsible for paying use tax for the right to use the property purchased in Tennessee. The use tax rate is equal to the sales tax rate.

Example of Use Tax Computation:

Purchases subject to Tennessee Consumer Use Tax           $205.98
Use Tax Rate (Davidson County)                                                x    9.25%
Tennessee Consumer Use Tax due                                          $  19.05 is not required to collect Tennessee sales tax on purchases shipped to Tennessee consumers until 2014. Until then, consumers are expected to voluntarily comply with the State’s consumer use tax laws and are responsible for paying the use tax.

The new law requires Amazon to notify each of its customers, with purchases shipped to Tennessee, of their potential use tax liability. The emails being received by customers include the total amount of purchases the customer had delivered to Tennessee during calendar year 2011.

Note:  If you made purchases it is likely you have made other purchases where sales tax was not collected and, therefore, subject to the Tennessee Consumer Use Tax. 

Amazon is not required to provide this purchase information to Tennessee. The State hopes these email notifications will make taxpayers aware of the use tax; therefore, increasing compliance with the use tax requirements and increasing state tax revenues. Tennessee has stated that it will not assess penalties for the late filing of the use tax return.

Tennesseans can choose to file the Consumer Use Tax return either online through the Department of Revenue’s website or by downloading a one page form to complete and mail in.  If you have any questions about your TN Use Tax requirements or need help preparing the Consumer Use Tax return, please contact us.

For additional information about the use tax click here.

To file your Consumer Use Tax return online click here.

The content of this transmission does not constitute a professional service nor does it constitute a tax opinion under IRS Circular 230. Always consult with a competent professional service provider for advice on tax, accounting, and other financial matters specific to your situation. If you wish to engage our firm for this purpose, please contact our office.

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