Tennessee has issued guidance on one-time sales tax holidays for 2020. Tennessee enacted legislation (S.B. 2932) that amends the state’s sales tax holiday provisions to expand the list of eligible items for the back-to-school sales tax holiday. These changes apply to the 2020 sales tax holiday only. During the period July 30 through August 2, 2020, the following items may be purchased tax-free:
Eligible electronic devices include computers, tablets, printers, televisions, cell phones, electronic readers, and video game consoles for personal use. Items such as household appliances and individually purchased software are not exempt for purposes of the sales tax holiday.
S.B. 2932 also creates a new one-time sales tax holiday for 2020 that will take place from August 7 through August 9, 2020. During this period, the retail sale of food and drink by restaurants and limited service restaurants is exempt from sales tax. “Restaurants” are defined in part as establishments that serve meals and drinks to patrons and have a seating capacity of at least 40 patrons. “Limited service restaurants” are defined in part as establishments that sell alcoholic beverages and food and have a seating capacity of at least 40 patrons, with a majority of revenue being derived from the sale of alcoholic beverages.
Businesses that do not meet the definition of either “restaurant” or “limited service restaurant” should collect and remit sales tax on sales during this period.
Exempt sales made during the sales tax holidays should be reported on Schedule A, Line 10 of the Sales and Use Tax Return. (Important Notice No. 20-12, Tennessee Department of Revenue, June 2020; S.B. 2932)