Why does a catalog company or an online seller located in another state charge Tennessee sales or use tax?

If an out-of-state business has nexus in Tennessee, then that business must register to collect Tennessee sales or use tax on merchandise delivered to a Tennessee customer.

Out-of-state dealers that conduct certain business activities in Tennessee, or engage in regular and systematic solicitation of consumers in Tennessee and who make more than $500,000 in sales in the previous 12 month are required to collect and remit Tennessee sales tax.

Some businesses located in other states voluntarily register to collect Tennessee sales or use tax to eliminate the customer’s obligation to file a consumer use tax return.

The use tax has been in effect since 1947, and it is the counterpart to the sales tax. Many Tennessee businesses and consumers are unaware that use tax is owed on items they have imported into this state without paying sales tax to the seller. 

When someone buys merchandise online or through a catalog, and the seller of the merchandise does not collect sales tax, the consumer who bought the item has a legal obligation to file and pay use tax on the merchandise. The use tax is levied at the same rate as the sales tax.  You may file a consumer use tax return on the Tennessee Taxpayer Access Point (TNTAP)

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