I am an out-of-state business with no business locations in Tennessee. Do I owe business tax?

If you are an out-of-state business, you must pay the state business tax if you have substantial nexus and you:

  • sell a service that is delivered to a location in Tennessee,
  • lease items in Tennessee,
  • sell items that are shipped or delivered to a location in Tennessee, or
  • make sales as a natural gas marketer to customers located in Tennessee through the presence of your property in Tennessee, through the holding of pipeline capacity on pipelines located in Tennessee, or by using someone located in Tennessee acting on your behalf.

For tax years beginning on or after January 1,2016, substantial nexus includes, but is not limited to, any of the following:

  • The taxpayer is organized or commercially domiciled in Tennessee;
  • The taxpayer owns or uses its capital in Tennessee; 
  • The taxpayer has a systematic and continuous business activity in this state that has produced gross receipts attributable to customers in Tennessee; or
  • The taxpayer has a bright-line presence in Tennessee. A person has a bright-line presence in this state for a tax period if any of the following applies: 

TNReceipts: > $ 500,000 or 25% of  total receipts

TN Property: > $ 50,000 or 25% of total property

TN Payroll: > $ 50,000 or 25% of total compensation paid

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