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TACIR backs tiered vendor‑compensation approach and recommends caution on card‑fee changes
Summary
TACIR approved its final report on vendor compensation for sales and use tax collection and recommended a tiered, capped vendor compensation structure if Tennessee reinstitutes vendor compensation; staff also recommended no action on excluding tax from payment card fees until legal tests conclude in Illinois.
The commission approved its final report on vendor compensation for sales and use tax collection, prepared in response to Public Chapter 1013 (Acts of 2024).
Senior Research Associate Michael Strickland summarized staff findings and two recommendations: if Tennessee were to reinstitute vendor compensation, use a tiered rate structure with caps to direct proportionally greater compensation to smaller businesses; and refrain from changes to payment card fee treatment pending outcomes of litigation testing the legality of excluding sales tax from card transaction fees in Illinois.
Strickland said staff added clarifying edits and an appendix comparing vendor compensation practices in other states but left the two principal recommendations unchanged following presentation of the draft report in December. Commissioners approved the report by voice vote without recorded objections.
The final report provides comparative state examples in appendix B and aims to inform any future legislative deliberations on vendor compensation and sales‑tax treatment of payment card fees.
