Tennessee Tax Nexus

Businesses with nexus in Tennessee are required to register with the Tennessee Department of Revenue and to charge, collect, and remit the appropriate tax.

Generally, a business has nexus in Tennessee when it has a physical presence there, such as a retail store, warehouse, inventory, or the regular presence of traveling salespeople or representatives. However, out-of-state sellers can also establish nexus in the ways described below.

Tennessee nexus for out-of-state sellers

Click-through nexus

Referrals, including online referrals, from in-state entities may trigger nexus for out-of-state vendors. Under the state’s additional nexus standard, an out-of-state seller is presumed to have substantial nexus in Tennessee if both the following conditions are met:

  • The dealer enters into an agreement or contract with one or more people located in Tennessee under which, for consideration, the person refers potential customers to the dealer, by link on an internet web site or other means
  • The cumulative gross receipts from retail sales by the dealer to customers in Tennessee as a result of referrals to the dealer by all of the dealer’s resident representatives under the type of agreement or contract described above total more than $10,000 during the preceding 12 months

Economic nexus

Two new revenue rules (1320-05-01-.129 and 1320-05-01-.63) adopted by the Tennessee Department of Revenue create an economic nexus policy, whereby substantial nexus is established for out-of-state dealers that do both of the following:

  • Engage in the regular or systematic solicitation of consumers in this state through any means
  • Make sales that exceed $500,000 to consumers in this state during the previous twelve-month period

Affected dealers are required to register with the Department of Revenue by March 1, 2017 and begin collecting and remitting sales and use taxes to the department beginning July 1, 2017.

See the Tennessee Department of Revenue, Sales and Use Tax Notice and Out-of-State Dealer Sales and Use Tax Registration; Tennessee Rules 1320-05-01-.129 and 1320-05-01-.63; and House Bill 644 (Public Chapter 514).