Tennessee Sales Tax Guide
Chapter 3: Getting registered to collect Tennessee sales tax
The first step toward proper management of Tennessee sales tax involves getting registered with the Tennessee Department of Revenue. We get a lot of questions regarding this and recognize it may be the most difficult hurdle for small businesses to overcome. Registering to collect sales tax in Tennessee means you've acknowledged your legal responsibility to collect and consequently file and remit sales tax to the state.When do I need to register to collect sales tax in Tennessee?
There are two ways to think about this question. The first involves a topic called "nexus". Nexus, in the tax world refers to a company's connection to a state. While this connection is typically that of a physical nature (warehouse in the Tennessee, inventory in Tennessee, etc.), nexus is not limited to a physical presence. There are many nexus triggers we won't delve into here and, more importantly, nexus is often determined by a combination of events rather than a single event.
If it is determined you have nexus in Tennessee, the Tennessee Department of Revenue has the legal right to require you to collect, file, and pay sales tax.
If you've determined you have nexus in Tennessee, the second question involves a topic we call "materiality". In short, you'll want to ask yourself whether the amount of sales tax you are required to collect and remit to the Tennessee Department of Revenue is enough to put you at an unacceptable level of penalty and interest risk. As everyone's level of risk tolerance is different, this is a question that can only be answered by you, the business owner.
Prior to selling taxable goods or offering taxable services in Tennessee, a business that has established nexus within the state is required to register for an Business Tax License.What triggers nexus in Tennessee?
Nexus is a complex topic that, depending on your situation, may require the in-depth knowledge of a qualified tax professional. That being said, there are a few common business events and situations that are known to trigger nexus in Tennessee. The most common include the following:
- Opening an office in Tennessee
- Storing inventory in a warehouse in Tennessee
- Having remote employees located in Tennessee
Businesses may register for an Tennessee Business Tax License online by visiting the Tennessee Department of Revenue and following the instructions provided.
It is also possible to get registered for a Business Tax License by completing and mailing in a Application for Registration (RV-F1300501), but this approach is not recommended. Form based registration is being phased out in favor of online registration. It’s fast, free, and more reliable than mailing in a completed paper form.What information is required to register for a Tennessee Business Tax License ?
When applying for a Tennessee Business Tax License, there are a number of pieces of information that may be required. These include, but are likely not limited to:
- Business name
- Business entity type
- Description of business activities
- Date business activities began or will begin
- Business address and mailing address
- Business contact information
- The North American Industry Classification System (NAICS) code that best matches your business
- Federal Employer Identification Number (FEIN)
- Your name, Social Security Number (SSN), driver license number, personal address, and personal contact information of owner/sole proprietor
- List of business officers, partners, managing members, and/or trustees
- Employment information (date of hire, number of employees, payroll amounts, payroll agent’s PTIN, if applicable)
The cost to register for a Tennessee Business Tax License is currently $0.Do I need a Federal EIN in order to register in Tennessee?
The Tennessee Department of Revenue requires businesses requesting a new Business Tax License to supply a valid Federal EIN number during the initial registration process. You can apply for an EIN number online by visiting the IRS website.Which Tennessee governement agencies do I need to register with in order to get a new Business Tax License?
We recommend you contact the Tennessee Department of Revenue to verify which government agencies you will be required to register with. Potential agencies include the following:
- Tennessee Department of Revenue
- Tennessee State Employment Agency
- Tennessee State Department of Labor
- Tennessee Local Tax Jurisdictions
Yes! Tennessee Business Tax License registration is unique to the state of a business. The Tennessee Department of Revenue requires all registered businesses to have current business owner name and contact information on file.