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Tennessee Sales Tax Holiday Retailer Guide


The Tennessee Department of Revenue provides a  retailer guide for the August 3-5 Sales Tax Holiday.

The guide includes the following instructions (see the guide for a complete list):

Who Must Participate

Tennessee sellers who sell to individuals, regardless of whether they also sell to businesses, must participate in the sales tax holiday. Sellers who only sell to businesses are not required to participate.

Exempt Items* 

  • Clothing items that cost $100 or less
  • School and art supplies that cost $100 or less
  • Computers that cost $1,500 or less

*See the Department overview the for a complete list of exempt and non-exempt items.

Articles Sold as a Unit

Articles normally sold as a unit must be sold that way during the Sales Tax Holiday. They cannot be priced separately and sold as individual items to qualify for the exemption. However, components normally priced as "separates" may still be sold as separate articles, and any piece that is less than $100 will qualify for the exemption.

Special Offers

  •  "The total price of items advertised as 'buy one, get one free' or 'buy one for a reduced price' cannot be averaged to qualify both items for the exemption. The exemption depends on the actual price paid for each item."
  • If a seller discounts an eligible item to $100 or less, the item will qualify for the exemption.
  • Coupons that entitle ". . . the retailer to a third-party reimbursement, such as a manufacturers coupon" do not reduce the item's price for the purposes of determining if it qualifies for the exemption.

Exchanges and Layaway Sales

  • If a purchaser buys an exempt item during the sales tax holiday and ". . . later exchanges it for the same item in a different size or color, tax is not to be charged even if the exchange is made after the Sales Tax Holiday."
  • If a customer buys an exempt item during the sales tax holiday and returns it after the holiday for credit, or to purchase another item, ". . . sales tax applies to the newly purchased item . . . ."
  • If a customer buys an eligible item before the sales tax holiday and returns it during the holiday ". . . and receives credit on the purchase of a different item of eligible property, no sales tax is due on the sale of the new item."
  • "Qualifying items placed on or picked up from layaway during the Sales tax holiday are exempt from sales tax."

Mail, Telephone and Internet Orders

Eligible items sold by mail, telephone or Internet qualify for the sales tax exemption as long as the seller accepts the order during the holiday, even if the item is shipped after the holiday period.

Reporting

The Department of Revenue also informs retailers that ". . . retailers selling items exempt from tax during these tax holiday periods must report their exempt sales on Schedule A, Line J of their Sales and use Tax Return" [link added].

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.