Most businesses starting in Tennessee that sell a product or offer certain services will need to register for a Tennessee sales tax permit. This permit is also called a seller’s permit, sales tax license, sales tax number, or sales tax registration.
Check out the rest of this guide to determine who needs a Tennessee sales tax permit, what products and services are taxable, how to register for a permit, and reporting requirements.
Related: Tennessee Startup Checklist
Who needs a sales tax permit in Tennessee?
A business must register for a sales tax permit in Tennessee when:
- A business has an economic nexus. Economic nexus means having a physical presence in the state, such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
- Making retail sales or selling taxable services in Tennessee.
- Hiring employees based in Tennessee (including sales representatives or agents).
- An online business located in Tennessee is selling taxable products to Tennessee residents.
- A remote seller or an out-of-state business selling over $500,000 of taxable products and services to Tennessee residents.
Tangible personal property is defined as items that can be seen, weighed, measured, felt, or touched. Pre-written computer software is also considered tangible personal property.
What products and services are taxable in Tennessee?
Physical products
There are a few exceptions, but almost all physical products are taxable when sold at retail in the state of Tennessee. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Digital Products
Digital products are taxable in Tennessee.
Services
Most services aren’t taxable in Tennessee, however, there are a few exceptions, some of which include:
- Short-term lodging
- Providing repair to tangible personal property or computer software
- Laundering or cleaning of any tangible personal property
- Installation of computer software
A full list of taxable services in Tennessee is available from the Department of Revenue (TNDOR).
How to register for a sales tax permit in Tennessee
A sales tax permit can be obtained by registering through the Tennessee Taxpayer Access Point (TNTAP) or mailing in the Application for Registration.
Information needed to register includes:
- Projected annual sales
- Date business began
- Fiscal year-end date
- Physical and mailing address
- Federal Employer Identification Number (FEIN) from the IRS. The EIN is not required if the business is a sole proprietorship with no employees.
- Type of business entity: Sole Proprietorship, partnership, corporation, Limited Liability Company (LLC)
- Description of what products or services are being sold
- Name, address, SSN, phone number, and title of owners/officers/members
Sales tax reporting
How is sales tax collected?
When a business sells a taxable product or service, it charges the appropriate sales tax rate to the customer. The business collects this tax and sends it to the Tennessee Department of Revenue.
How much sales tax is charged?
If the purchase is made at a store or in a mobile location, the sales tax rate varies depending on where the sale occurred in Tennessee. In addition to the statewide sales tax, city and/or county governments may add additional sales taxes. When shipping in-state, the sales tax is based on the purchaser’s address.
To find sales tax rates, see sales tax rates by address from the Tennessee Department of Revenue.
When are Tennessee sales tax returns due?
The Department of Revenue will determine a filing frequency based on the expected sales volume, which will be monthly, quarterly, or annually.
The filing deadline is the 20th day of the month following the reporting period unless the 20th falls on a weekend or federal holiday, in which case it would move to the next business day. Penalties and interest will be assessed for late filings.
Even if the business had no sales during the reporting period, a filing is still required, indicating no sales occurred.
Tennessee Sales Tax Permit FAQs
How much does a Tennessee sales tax permit cost?
There is no cost for a sales tax permit in Tennessee.
How long does it take to get a sales tax permit in Tennessee?
Expect 1-2 business days to receive a sales tax permit when registering online or up to 2 weeks when applying by mail.
After registering, the Department of Revenue will send you a Certificate of Registration that you must display at your business location.
Do you have to renew a Tennessee sales tax permit?
The sales tax permit is a one-time registration, and no renewals are needed. Be mindful that if any information about the business changes, such as the mailing address, additional locations, or change in ownership, those changes need to be updated with the Department of Revenue.
Is a business license the same thing as a sales tax permit?
No – A business license and a sales tax permit are different. Here’s how they differ:
A business license gives you the right to operate your business in a specific area, while a sales tax permit allows you to collect sales tax from your customers on behalf of the state.
In many cases, a business will need both.
How do I get a wholesale license in Tennessee?
A business can purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or vendor to the retailer, who will then charge sales tax to the end-user of the item.
Wholesalers and distributors will require a sales tax number and a completed Tennessee Certificate of Resale (also referred to as a Tennessee seller’s permit, resale certificate, wholesale license, or sales tax exemption certificate) to document that the purchased items are for resale.
When retailers register for a Tennessee sales and use tax account, they are automatically issued a Tennessee Sales and Use Tax Certificate of Resale.
If you have questions about the sales tax permit, the Tennessee Department of Revenue has a Sales & Use Tax Guide, or you can contact them by calling 800-342-1003.
