Sales of merchandise through vending machines are subject to sales tax at the standard state rate or the reduced food rate plus a standard 2.25% local rate. These sales are reported monthly on the State and Local Sales and Use Tax Return.
The local tax on vending sales is reported on the sales tax return by deducting the vending sales amount on Schedule B, Line 6 and reporting the vending sales amount and the local tax on the vending sales amount on Schedule C, Lines 13 and 14.
Reference: Important Notice 17-17. Tenn. Code Ann. §§ 67-6-202(c), 67-6-702(h) and 67-4-506. Tenn. Comp. R. & Regs. 1320-5-1-.90.