What parties are subject to the Tennessee business tax in a floral wire service transaction?

There are three parties involved in a floral wire service transaction: the floral wire service company (“the wire service”), the florist that accepts an order (“accepting florist”), and the florist that makes and delivers the arrangement (“delivering florist”).  Examples of floral wire service companies include FTD, Teleflora, 1-800-Flowers, Interflora, Bloomnet, etc.  Generally, the wire service receives fees from the two florists for its services, and the two florists get a percentage of the sales price as commissions (e.g., the accepting florist receives 20% and the delivering florist receives 80%). 

In this arrangement, each party, if doing business in Tennessee, will pay business tax on the amount it receives (i.e., the accepting florist will pay on the 20%, and the delivering florist will pay on the 80%).  The accepting and delivering florists may not deduct the fees paid to the wire service from its business tax base.  If the wire service has substantial nexus with Tennessee, it will owe business tax on all fees received from Tennessee accepting and delivering florists.

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