Tennessee Sales Tax Guide
Chapter 5: Filing and paying Tennessee sales tax
You're registered with the Tennessee Department of Revenue and you've begun collecting sales tax. Congratulations! Remember, those tax dollars don't belong to you. As an agent of the state of Tennessee, your role is that of intermediary transferring tax dollars from consumers to state and local tax authorities. Let's take a deeper look at how filing Tennessee sales tax returns impacts your business.What does it mean to file an Tennessee sales tax return?
Technically speaking, filing Tennessee sales tax returns is a two-step process comprised of submitting the required sales data and remitting the collected tax dollars (if any) to state and local tax authorities.
In most states, there are a number of options for submitting sales tax data to the state. Business owners may complete a Tennessee sales tax filing form and mail it to the Tennessee Department of Revenue or they can file electronically online. In all states, filing online is recommended.
The filing process forces the business owner to detail their total sales, the amount of sales tax they have collected, and from where. The Tennessee Department of Revenue wants to be kept up to date on your business growth (or lack thereof) to make sure they are getting the tax dollars due. By completing ongoing filing of monthly, quarterly, or semi-annual, or annual Tennessee sales tax returns, they stay abreast of your growing company.When am I required to file my sales tax return?
The Tennessee Department of Revenue will assign you a filing frequency. Typically, this is determined by the size of your business. State governments typically ask larger businesses to file more frequently. Visit our Tennessee filing due dates page for more information.Am I required to file and pay my Tennessee sales tax at the same time?
Tennessee sales tax returns must be filed and paid at the same time and are governed by the same due date.I want to webfile my Tennessee sales tax. What are my options?
Avalara has built the TrustFile product to allow business owners a quick and easy way to prepare and webfile Tennessee sales tax returns. Users can sign up and use the service to prepare Tennessee returns free for 30-days.
Filers may also file directly with the Tennessee Department of Revenue by visiting their site and entering your transaction data manually. This is a free service, but preparing Tennessee sales tax (breaking it down by jurisdiction) can be time consuming - especially for larger sellers.Can a 3rd party file my sales tax on my behalf?
Yes! Many business owners recognize they are not a tax professional and therefore, choose to outsource their sales tax sales and use tax filing to services like Avalara TrustFile or to an accountant or bookkeeper. This is a normal business practice that can save business owners time and help them avoid costly mistakes due to inexperience and a lack of deep knowledge about Tennessee sales tax code.What happens if I file or pay my sales tax return late?
Late Tennessee sales tax return filing or payment will result in a penalty of 5% of the outstanding tax liability for each 1 to 30 day period during which the tax remains outstanding. The penalty is capped at a maximum of 25% of the outstanding tax liability. The minimum penalty is $15 regardless of whether any tax was due.
The Tennessee Department of Revenue reserves the right to charge interest on any outstanding tax liability at an annual rate of 7.25%, assessed daily.Do I need to file a return if I didn't collect any sales tax in Tennessee?
Yes! Once you've successfully registered for and been issued a Business Tax License, you are required to file at the completion of each assigned collection period regardless of whether any sales tax was collected. This is what is known as a "zero-tax filing".
Failure to submit a required zero-tax filing can result in penalties imposed on your business by the Tennessee Department of Revenue so don't take this responsibility lightly.If I close my business, do I need to file a final sales tax return?
Yes! The Tennessee Department of Revenue requires all businesses to "close their books" by filing a final sales tax return. This also holds true for business owners selling or otherwise transferring ownership of their business.Does the Tennessee Department of Revenue offer a discount for filing on time?
At this time, the Tennessee Department of Revenue does not offer sales tax filers a vendor discount.