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Commission approves report recommending tiered vendor compensation approach; urges pause on card‑fee changes
Summary
Commission approved a final report on vendor compensation for sales and use tax collection that recommends a tiered rate and cap structure if Tennessee reinstates vendor compensation and recommends waiting on action regarding exclusion of sales tax from payment‑card fees until litigation in other states resolves.
The commission approved a final report on the costs to businesses of collecting and remitting state and local sales and use taxes and on vendor compensation options.
Senior research associate Michael Strickland (presenting) said the report responded to Public Chapter 1013 (Acts of 2024) and compared Tennessee’s options to other states. The staff maintained two recommendations in the final report: first, if Tennessee reinstitutes vendor compensation it should use a tiered set of compensation rates with a cap structure to protect smaller businesses from disproportionate collection costs while avoiding windfalls for larger businesses and revenue shortfalls for the state; second, because the effects of excluding sales tax from payment‑card convenience fees are unclear and the legality is being tested in Illinois, the report recommends Tennessee delay any action on card‑fee exclusions until the outcome of the Illinois litigation is known.
The chair called for approval; the vice chair seconded. The commission approved the report unanimously by voice vote.
