United States

Tennessee: Proposed Rule Would Adopt Economic Nexus Standard for Sales and Use Tax

Jul 11, 2016
From KPMG TaxWatch

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Tennessee appears to be the next state seeking to jump-start litigation over the physical presence nexus standard articulated in the 1992 Quill case. Similar to a regulation adopted earlier this year in Alabama, the Tennessee Department of Revenue has proposed a rule adopting an economic nexus standard for sales and use tax purposes. If the rule is promulgated as proposed, out-of-state dealers that engage in the regular or systematic solicitation of consumers in Tennessee through any means and make sales exceeding $500,000 to Tennessee consumers during the calendar year would be considered to have substantial nexus with the state. These dealers would be required to register with the state by January 1, 2017 and would have to begin to collect and remit sales tax by July 1, 2017. A hearing on the proposed rule will be held on August 8, 2016, and comments may be submitted to the Department at any time prior to the hearing. Please stay tuned to TWIST for future updates on the proposed rule.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.