I use an online company to rent my property as a short-term rental. The company has notified me that they are going to collect sales tax on my behalf. Does this mean I am exempt from all Tennessee taxes?

If the online company (or internet-based platform) has signed an agreement with the Department of Revenue to collect and remit sales tax on behalf of its hosts, you, as the host, are not responsible for paying sales tax that is collected from customers on bookings made through that platform. In these instances, the online company will remit the collected sales tax on your behalf. As a host, you must still maintain records to document that the online company reported and paid sales tax on your behalf.

If the online company does report and remit sales tax on your behalf, be aware that you still may be responsible for other types of taxes that are due on your short-term rental (please review each tax type listed below for other taxes you may be liable for).  Also, if you rent your property directly, you must continue to collect and remit the sales tax on these bookings. If you use multiple online-platforms to rent your property, it is your responsibility to contact each platform to verify whether it has signed an agreement with the Department to collect and remit sales tax on your behalf. If the platform has not signed an agreement to collect and remit the sales tax on your behalf, you are still responsible for collecting and remitting the sales tax on bookings through that platform.

Sales Tax

If you sell or rent items of tangible personal property that are not sold through the internet-platform, you will be responsible for reporting those sales and collecting and remitting sales tax on those sales.  For example, if you offer an optional sale of firewood or rent recreational equipment separately from the rental of the accommodation booked through the platform, you must collect and remit sales tax on those sales/rentals.

Use Tax

You will continue to be responsible for paying use tax on any items used in providing the accommodations on which no Tennessee sales tax has been paid.  For example, if you purchase furniture from an out-of-state seller that does not charge Tennessee sales tax, you must pay Tennessee use tax on the purchase.

Business Tax

If your total taxable gross receipts (including rental receipts on all accommodations in a jurisdiction, regardless of who collects the receipts, as well as the receipts from the rental or sale of any other tangible personal property) in a jurisdiction (county and city) are $10,000 or more, you must register for and pay business tax to the Department and obtain a business license from the county and, if applicable, city in which the property is located.  Even if your gross receipts within a jurisdiction are between $3,000 and $10,000, you must obtain a minimal activity license from your local county, and if applicable, your local city.

Franchise and Excise Taxes

If you are an entity that provides your owners limited liability protection (corporation, LLC, etc.), then you also may be liable for franchise and excise taxes.  Note that sole proprietors and general partnerships would not be subject to these particular taxes.

Local Taxes

Additionally, please note that there may be other locally administered taxes (that the Department of Revenue does not administer) that you may be subject to, such as hotel occupancy tax and property tax. Please contact the local government in which your property is located to determine whether any local taxes apply.

Additional information about collecting and remitting sales tax for the rental of your home can be found here.

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