Tennessee removes simplified local sales tax reporting option

Beginning October 1, 2019, the Tennessee Department of Revenue will begin to enforce new rules regarding local sales tax rates for out-of-state dealers.

Current Tennessee legislation requires all wineries that wish to ship directly to consumers in Tennessee to collect and remit sales tax. These and all other out-of-state dealers have been given the option to report all local sales and use taxes at a flat tax rate of 2.25 percent. This allowed for simpler, more streamlined reporting of sales across jurisdictions.

While the legislation surrounding the reporting requirement for wineries itself hasn’t changed, the requirements for reporting local sales and use tax has. Now, in this post-Wayfair world, the Tennessee Department of Revenue has decided to make the local sales tax reporting requirements for out-of-state dealers more like those of California and other states that have enforced nexus rulings. Instead of the flat rate of 2.25 percent that was allowed up until this point, out-of-state dealers will now be required to collect and remit local sales tax based on the delivery destination of their product. It’s also worth noting that incorporated and unincorporated areas may be taxed at different rates. The delivery destination is based on the situs, or source location, code for each location, a list of which can be found here.

Starting October 1, it will be a requirement to report local sales and use taxes by jurisdiction along with the state report. However, the calculation on the state report must now take into account the specific local sales and use tax rate for each jurisdiction. After they’re paid to the state, these taxes will be distributed to the jurisdictions under which they were reported. 

Tennessee’s local sales and use tax rates can be found here. Avalara for Beverage Alcohol maintains changes like these in all U.S. jurisdictions and will begin reporting these local sales tax rates for customers starting October 1. 

Want to find out more about these tax changes, or how Avalara can help you manage your specific compliance needs? Visit Avalara for Beverage Alcohol.