Do out-of-state contractors submit escrow funds or bonds to the county clerks or city officials when they are issued a license?

Yes, contractors located outside Tennessee must execute a bond or establish an escrow account with the county or municipality where they are applying for a business tax license. Effective January 1, 2014, each county or city may contract with the Department of Revenue to receive such bonds – this can be verified with each clerk to determine where the funds should be sent. The state may collect against the surety company up to the amount of the bond to satisfy a taxpayer's business tax liability in the event of failure by the taxpayer to pay taxes due to the state.

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