Tennessee Enacts Legislation to Enforce Economic Nexus Rules

Effective Date: July 1, 2019 but not enforced until October 1, 2019

Threshold: $500,000

Measurement Date: Previous 12-month period

Includable Transactions: Gross sales

When You Need to Register Once You Exceed the Threshold: The first day of the third month following the month in which the dealer met the threshold

Tennessee has enacted new legislation that will allow the Tennessee Department of Revenue to enforce its economic nexus rule that was originally effective July 1, 2017. The original legislation faced a legal challenge and an injunction and has not been enforced up until this point.

With the enactment of H.B. 667, Tennessee will require out-of-state sellers with more than $500,000 in sales into the state during the previous 12-month period to collect sales and use tax, effective July 1, 2019. The DOR is no longer prohibited from collecting internet sales or use taxes pursuant to Rule 1320-05-01-.129(2), as the court rulings pertaining to this rule have been reviewed by the Tennessee General Assembly. (H.B. 667, Laws 2019, Effective July 1, 2019)

UPDATE: Tennessee released Notice #19-04 which states that out-of-state dealers with no physical presence in Tennessee who meet the state’s economic nexus threshold as of July 31, 2019 must register and begin collecting Tennessee sales and use tax by October 1, 2019.

Posted on May 30, 2019