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Update On Tennessee

Tennessee is inching forward on their version of the Internet Tax. It is important to remember that the fiscal report seems to indicate that affiliates will not be considered basis for nexus. I posted this earlier but it bears repeating.

From SB1741 Fiscal Report:

• According to the Department of Revenue (DOR), out-of-state dealers with commissioned representatives in this state, who merely solicits sales for such dealers, and whereby customers pay dealers directly, does not make such dealers responsible for sales tax unless they have some form of traditional nexus in the state.
• DOR acknowledges that this bill seems to require out-of-state dealers to be responsible for sales tax and infer that the existence of the commissioned representatives creates a sufficient physical presence or nexus enabling the department to require registration of the dealer under certain circumstances. However, the Department has indicated that this bill alone would not be deemed sufficient for broadening the definition of traditional physical nexus in order for the department to require registration by such dealers. As a result, any increase to state revenue is considered to be not significant.

It is important to note that if that is the case, it is important that everyone be educated on it. The threshold of the Tennessee SB1741 and HB 1947 is only $2,000, considerably lower. If people react without understanding the Department of Revenue opinion the legislation will have a devastating impact on affiliates when it really shouldn’t. I am not a sale tax lawyer or accountant so professional advice should be sought should this bill pass.

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