At a Department of Revenue new-business webinar, presenters covered the essentials of Tennessee sales and use tax, including which sales are taxable, how local rates are applied and how businesses should use and retain resale and exemption certificates.

Katie Julian explained the dual structure of Tennessee sales tax: a general state rate (7%) plus a variable local rate (up to 2.75), with a reduced state rate for food and a special treatment for specified digital products. "Sales tax is the principal source of revenue in this state," Julian said, and noted that most businesses collecting sales tax must register and file through TenTap.

Why it matters: sales tax collections are the principal revenue source for the state and local governments; collecting, remitting and documenting exemptions or resale transactions are regular obligations for retailers and many service providers.

Key points presented:
- Taxable items: sales of tangible personal property generally are taxable unless specifically exempted by law; sales of services are generally non-taxable unless the law lists them or they are part of a taxable tangible sale. Examples of taxable services include installation or repair of tangible personal property, lodging, parking, certain telecommunications and short-term rentals.
- Rates and local determination: state rate is generally 7%; local rates vary by county and municipality (up to 2.75). Food-for-home consumption carries a 4% state rate plus applicable local tax. Presenters demonstrated the Department’s local tax-rate map and address lookup tool for delivery-based determinations.
- Resale certificates: a resale certificate allows a registered retailer to buy items for resale without paying sales tax to the supplier. Resale certificates do not cover items the business will use itself; businesses should keep resale certificates on file and separate mixed purchases at the point of sale.
- Use tax: a companion to sales tax, use tax is due when Tennessee sales tax was not collected on otherwise taxable tangible goods brought into or used in Tennessee.

Practical advice: presenters recommended that retailers use TenTap, check local rates by exact address, retain exemption certificates (including for government and nonprofit purchasers), and separate resale purchases from purchases for business use to avoid audit issues.

Ending: the Department pointed attendees to the sales tax manual, recorded webinars, and TenTap help resources, and encouraged businesses to call or email the Department with account-specific questions.