Tennessee Sales Tax Filing Update: Marketplace Facilitator Laws
Tennessee passed a law requiring Marketplaces to collect and remit sales tax on sales facilitated through the marketplace effective October 1, 2020.
- The bill to propose marketplace facilitator regulation was introduced in early 2019.
- The law was signed into action and approved on April 1, 2020.
•Amazon, eBay, Etsy and Walmart began this collection on October 1, 2020.
Please review general information regarding Marketplace Facilitators and how your TaxJar Sales Tax Reports support these changes here in our FAQ.
In this article, we summarize Tennessee’s state guidance on the following questions:
- Do I need to register for a sales tax license in Tennessee?
- Should I cancel my existing registration if all my sales are marketplace-collected?
- Do I need to collect sales tax on Tennessee sales on non-marketplace platforms?
- Do I still need to file returns in Tennessee?
- How do I file without paying double tax on the sales that were collected and remitted by my Marketplace?
I've never registered for a Tennessee license. Do I need to register for a sales tax license in this state now?
According to the state's guidance, "a marketplace seller is not required to register as a dealer if all its taxable sales are facilitated by marketplace facilitators who are the retailers for purposes of those sales."
Please note, this new Marketplace Facilitator law does not change the current requirements to register for a sales tax license in Tennessee due to physical and/or economic nexus.
- Beginning October 1, 2020, the sales threshold will be established at $100,000. Out-of-state dealers with no physical presence in Tennessee who make $100,000 or more in sales to Tennessee customers will be required to register and collect Tennessee sales and use tax. For more information, please refer to the state's notice here.
I have already registered for a license in Tennessee and all of my sales are Marketplace-only sales. Should I cancel my existing registration?
If you are a marketplace seller who has already registered due to physical presence (such as inventory stored in your Marketplace's warehouse) or you have voluntarily registered, you should remain registered, according to the DOR.
- The state has not provided clear instructions on its website regarding this question. Therefore, we strongly recommend contacting the state directly to discuss your specific situation before canceling your registration.
Do I need to collect taxes on my Tennessee sales through other platforms?
Yes. If you have nexus in the state (physical or economic) and you make sales to customers in Tennessee on platforms outside of the marketplace that is automatically collecting and remitting, you will also need to collect tax on your end on the Tennessee orders that are processed on the other platforms.
Do I still need to file returns in Tennessee?
- If you've previously registered, the state expects you to remain registered and continue to file returns.
- If your only sales are Marketplace sales, the state may still expect you to file a zero return.
I still need to file returns in Tennessee. How do I do this without paying double tax on the sales that were collected and remitted by my Marketplace?
- The Report displays a new "Exclusions Sales" row, which is the sum of all marketplace sales for a given month.
- Please hover on the question mark tool tip to view more detailed information:
Please note, the "Exclusions Sales" row is displayed only if there are any qualifying transactions in the report. If there are none, then the Exclusionary Sales row is not displayed.
If you're enrolled in AutoFile for Tennessee, our system will handle the Marketplace sales deduction process automatically!