Tennessee Department of Revenue webinar outlines nexus rules for out‑of‑state businesses

Billy Trout, of the Tennessee Department of Revenue's Taxpayer Education Division, opened a public webinar describing how Tennessee determines ‘‘nexus’’ — the contact that gives the state jurisdiction to tax out‑of‑state businesses — and where companies should go to register, file and get more information.

Katie Julian of the Revenue department told attendees, "Nexus is the requisite contact between a taxpayer and a state before that state has jurisdiction to tax the taxpayer," and walked through how the rule applies differently to sales tax, business tax and franchise/excise tax. She emphasized Tennessee's resources, including a 350‑page sales and use tax manual and a boundary database that identifies the local sales tax rate by delivery location.

The presenters highlighted several concrete thresholds and tests. For sales tax, Katie said remote sellers that make $100,000 or more in sales delivered into Tennessee during a 12‑month period must register and collect Tennessee sales tax; she also explained the department's guidance for marketplace facilitators, which generally require collection and remittance when the facilitator's total Tennessee sales exceed that threshold. On substantial nexus, the department listed activities that can create an obligation even without a brick‑and‑mortar presence, including repair, installation, leasing or maintaining inventory in Tennessee, using agents or contractors, and certain promotional activity.

On the state business tax, the webinar described the BrightLine presence test: Tennessee‑attributable receipts that exceed the lesser of $500,000 or 25% of total receipts, the average value of real and tangible personal property in Tennessee exceeding the lesser of $50,000 or 25% of total property value, or compensation paid in Tennessee exceeding $50,000 or 25% of total compensation. Presenters said out‑of‑state businesses that meet substantial nexus and record at least $10,000 in gross sales attributed to any Tennessee county must register and file the state business tax; contractor‑specific licensing thresholds were discussed and the presenters noted an error on one slide that they corrected and will repost.

Jacob Roper of the department's Audit Division addressed attendee questions. He said Tennessee's drop‑shipping rule was repealed (Important Notice '22‑01), effective 01/10/2022, and advised that an out‑of‑state company should report sales to Tennessee customers on the state business tax return. Roper also said merely driving trucks through Tennessee does not by itself establish nexus for sales or business tax if the company does not make sales into Tennessee.

Throughout the presentation the department directed businesses to its online registration and filing portal (10 TAP) and to tn.gov/revenue for manuals, important notices, webinars and boundary‑rate lookups. Presenters repeatedly distinguished registration and filing obligations from amounts owed, noting that small registration liabilities (for example, the $22 annual minimum for an open business tax account) can exist even when tax due is minimal.

The webinar closed with the presenters thanking attendees, reminding them to complete a survey, and confirming that the recording and updated PDF materials, including the corrected contractor slide, will be posted to the Revenue website.