Tennessee — Sales & Use Tax

Tennessee imposes a sales tax on persons engaging in the business of selling tangible personal property at retail in the state. The tax is levied on the sales price of each item or article sold at retail and is computed on gross sales for remittance purposes. The state also imposes a use tax on tangible personal property that is used, consumed, distributed, or stored for use or consumption in Tennessee when sales tax was not collected, preventing duplication of tax. Additionally, certain services are subject to sales and use tax at the same rate as tangible personal property. Generally, all dealers are liable for collecting sales tax from their customers and remitting the tax to the Department of Revenue, while Tennessee residents and businesses must pay use tax when sales tax was not collected by the seller on otherwise taxable products.

Source: Tennessee Sales and Use Tax Manual, June 2025

Note: This update solely fixes a broken primary source link to the official Tennessee Sales and Use Tax Manual. No changes to rules or content were required, and the section remains accurate as of June 17, 2026.

Tennessee imposes a state sales tax at a general rate of 7% on retail sales of tangible personal property and taxable services. Food and food ingredients intended for human consumption are taxed at a reduced state rate of 4%. These state rates do not include local option sales taxes, which counties and municipalities may levy up to an additional 2.75%. The combined state and local rate varies by jurisdiction based on the applicable local tax.

Source: Tennessee Department of Revenue — Sales and Use Tax

Direct answer: Prepared food, candy, and dietary supplements are subject to the standard 7% Tennessee state sales tax rate, not the reduced 4% rate that applies to most food and food ingredients. These items are also subject to applicable local sales taxes.

Why: Tennessee law distinguishes between “food and food ingredients”—which are generally taxed at a reduced 4% state rate—and items classified as prepared food, candy, or dietary supplements, which are specifically taxed at the full 7% state rate. This distinction is made explicit in Tenn. Code Ann. § 67-6-228(b). The Department of Revenue further confirms the distinction in Important Notice #13-12 and guidance published in Important Notice SUT-53. Notably, “prepared food” encompasses foods sold in heated state or with eating utensils provided or available by the seller, “candy” is defined as preparations of sugar with minimal flour or fruit, and “dietary supplements” are products with nutritional ingredients, per statutory definitions (Tenn. Code Ann. § 67-6-102). These detailed definitions govern product classification at the point of sale and exclude the listed items from the reduced rate.

Source support:

• Tenn. Code Ann. § 67-6-228(b): “Notwithstanding other provisions… food sold as prepared food, alcoholic beverages, candy, and dietary supplements shall be taxed at the rate levied on tangible personal property by § 67-6-202(a).”
• Department of Revenue Important Notice SUT-53 (2013): Official statement that prepared food, candy, and dietary supplements are not eligible for the reduced food rate and are taxed at 7%.
• Department of Revenue Sales and Use Tax Manual, Chapter 12: Definitions of eligible/ineligible food and ingredients.

Source: Tenn. Code Ann. § 67-6-228(b) Source: Important Notice SUT-53 – Food and Food Ingredients Definition and Tax Rate Source: Tennessee Sales and Use Tax Manual, Chapter 12 — Food, December 2023

Caution / review status: Not yet human confirmed. All claims are cited to Tennessee statute and Department of Revenue guidance current as of June 17, 2026. Taxability of specific products should always be confirmed using the latest DOR publications and product-level rulings, especially where bundling or additional product definitions are in question.

Tennessee requires remote sellers with no physical presence to register and collect sales tax if they make sales exceeding $100,000 to Tennessee customers during the previous tax year. This threshold is based solely on revenue; Tennessee does not impose a transaction count requirement. Remote sellers meeting the $100,000 threshold must register and begin collecting tax on the first day of the third month following the month they exceed the threshold. This economic nexus standard became effective October 1, 2020, lowering the prior $500,000 threshold.

Source: Tennessee Sales and Use Tax Manual, December 2025

Tennessee requires marketplace facilitators to collect and remit sales tax on sales facilitated for marketplace sellers when the facilitator makes or facilitates more than $100,000 in total sales to Tennessee customers during the previous twelve-month period. This threshold includes both the facilitator's own sales and sales facilitated for third-party sellers. The collection requirement became effective October 1, 2020. When a marketplace facilitator collects tax on a facilitated sale, the marketplace seller is not obligated to collect or remit tax on that same transaction.

Source: Tennessee Department of Revenue — Out of State Dealers Marketplace Facilitators

Tennessee sales and use tax returns are due on the 20th day of the month following the end of the reporting period. When the 20th falls on a weekend or legal holiday, the deadline extends to the next business day. All dealers must file and pay electronically through the Tennessee Taxpayer Access Point (TNTAP), the Department of Revenue's online portal.

Filing frequency assignment

The Tennessee Department of Revenue assigns each dealer's filing frequency—monthly, quarterly, or annually—based on the dealer's sales volume or tax liability. Sales tax accounts are automatically set up for monthly filing upon registration. Dealers with an average monthly sales tax liability of $1,000 or less over a 12-month period may elect to file monthly or quarterly. This election option became effective July 1, 2021, and requires a 12-month filing history before the dealer may request a change to quarterly filing.

Annual filing generally applies only to manufacturers, wholesalers, and marketplace sellers that make sales exclusively through a marketplace facilitator that is already collecting and remitting Tennessee sales tax on those transactions.

Due dates by filing frequency

• Monthly filers: 20th day of the month following the reporting period (e.g., January sales are due February 20).
• Quarterly filers: 20th day of the month following the end of the quarter. The quarterly due dates are January 20 (for Q4 of the prior year), April 20 (for Q1), July 20 (for Q2), and October 20 (for Q3).
• Annual filers: January 20 of the following year.

Dealers must file a return for each assigned reporting period even if no sales tax was collected during that period. A "zero return" must be filed to avoid penalties and interest charges for failure to file.

Source: Tennessee Sales and Use Tax Manual, June 2025, p. 30 Source: Instructions: Tennessee Sales and Use Tax Return (Form SLS-450), July 2021 Source: Completing the Sales Tax Return, Tennessee Department of Revenue, October 2021, pp. 8–9

Tennessee retailers making purchases for resale must provide suppliers with a resale certificate to avoid paying sales or use tax on inventory they intend to resell. When a retailer registers for a Tennessee sales and use tax account, the Tennessee Department of Revenue automatically issues a Blanket Certificate of Resale for each business location. This certificate can be downloaded and printed through the Tennessee Taxpayer Access Point (TNTAP) portal after registration.

Proper use of resale certificates

A resale certificate may be used only when purchasing merchandise that the business will resold in the ordinary course of business. The certificate cannot be used to purchase items that will be consumed, used, or otherwise withdrawn from inventory by the business itself. If merchandise obtained under a resale certificate is extracted from inventory for promotional purposes, as gifts, or for personal use, the retailer must report the withdrawal on its sales tax return and remit tax directly to the Department of Revenue.

Out-of-state resale certificates

Effective January 10, 2022, Tennessee began accepting resale certificates issued by other states. An out-of-state dealer may provide its home-state resale certificate bearing the sales tax ID number issued by another state, or may provide a fully completed Streamlined Sales Tax Exemption Certificate containing another state's sales tax ID number, to make purchases for resale from Tennessee suppliers without paying Tennessee sales or use tax. This change reversed Tennessee's prior Rule 96, which had required out-of-state dealers to register in Tennessee and obtain a Tennessee resale certificate.

Out-of-state dealers that are not required to register for sales and use tax in any state (for example, dealers located in states that do not impose sales and use tax, such as Delaware, Montana, New Hampshire, or Oregon) may furnish a Tennessee supplier with a fully completed Streamlined Sales Tax Exemption Certificate that includes a tax ID number issued by their home state for another tax type (such as a business tax or excise tax number) or their federal employer identification number (FEIN). Foreign dealers not registered in any U.S. state must provide a fully completed Streamlined Sales Tax Exemption Certificate with a tax ID number issued by their home country.

Seller responsibilities and good-faith acceptance

Sellers that obtain and retain a valid resale certificate from a purchaser and follow the certificate requirements under Tenn. Code Ann. § 67-6-409 are relieved of liability for sales tax if the purchaser improperly claimed the exemption; in that case, the purchaser becomes liable for the tax. When a seller has a recurring business relationship with a purchaser, the seller is relieved from sales tax liability if it has obtained a blanket exemption certificate from the purchaser. Sellers are not required to update or renew blanket exemption certificates when there is a recurring business relationship.

The Tennessee Department of Revenue recommends that sellers periodically review resale and exemption certificates in their records. Purchasers must provide a new resale certificate if there are changes in the purchaser's business (such as a change in ownership or address) or if the certificate has expired (in the case of renewable exemption certificates such as agricultural or nonprofit certificates). Sellers making sales to a purchaser who has not made a purchase for more than one year (i.e., does not have a "recurring business relationship") may request a current resale certificate or may verify that the certificate in their records is still valid through TNTAP under "Sales and Use Tax Certificate Lookup" and "Verify a Sales and Use Tax Certificate." Verification does not relieve the seller of the responsibility of obtaining and keeping a copy of the certificate to document the exempt sale.

Sellers that do not follow the certificate requirements of Tenn. Code Ann. § 67-6-409 are liable for the tax. Sellers that fraudulently fail to collect tax or that solicit a purchaser to participate in the unlawful claim of an exemption are also liable for the tax.

Source: Tennessee Department of Revenue — Resale Certificate Source: SUT-32 — Appropriate Use of a Resale Certificate, Tennessee Department of Revenue Source: SUT-33 — Out-of-State Resale Certificates, Tennessee Department of Revenue Source: SUT-184 — Updating Resale and Exemption Certificates, Tennessee Department of Revenue

Tennessee sales and use tax applies only to services that the law explicitly enumerates; services are otherwise exempt unless they are part of a taxable sale of tangible personal property. Under Tenn. Code Ann. § 67-6-205(c), the following categories of services are subject to sales and use tax when sold for a consideration:

Enumerated taxable services:

• Lodging: Charges for rooms, lodgings, or accommodations furnished by hotels, motels, inns, tourist camps, and similar facilities (except stays of 90 continuous days or more by the same person).
• Parking services: Operation of garages, parking lots, or similar places for parking or storage of motor vehicles (excluding state-operated on-street parking or metered parking).
• Telecommunications services: Intrastate, interstate, or international telecommunications, including ancillary services.
• Repair services: Repairs of tangible personal property or computer software, unless specifically exempted elsewhere.
• Laundry and cleaning services: Laundering or dry cleaning of tangible personal property (but not coin-operated laundry, certain veterinary cleaning, or car washes).
• Installation services: Installing tangible personal property (including software) that remains tangible upon installation, when installation is not incidental to a manufacturing or processing activity otherwise not taxed.
• Specialty/niche activities: Enrichment of uranium (cost-plus or toll basis), renting/providing space to transient vendors, access to television/video services by electronic means (excluding satellite services taxed under another chapter).

Service taxation scope: The Tennessee Department of Revenue's Sales and Use Tax Manual emphasizes that services are subject to tax only if specifically enumerated by statute or as part of a taxable sale of tangible personal property; all other services remain exempt unless otherwise provided by law.

Taxability of Software as a Service (SaaS) / Remotely Accessed Software: Tennessee does not treat SaaS as a "taxable service" under its list of specifically enumerated taxable services. Instead, SaaS and other remotely accessed software are classified by statute as taxable computer software (tangible personal property) rather than as services. Under Tenn. Code Ann. § 67-6-231(a)-(b), Tennessee imposes sales/use tax on “the retail sale, lease, licensing or use of computer software… regardless of whether the software is delivered electronically, by load and leave, or otherwise provided.” Subsection (b)(2) specifically includes remotely accessed software—where the software remains in the possession of the seller or a third party but is accessed by a customer from a location in Tennessee—as a taxable event. The Department of Revenue, in both its guidance (SUT-58) and in the Sales & Use Tax Manual, confirms that software accessed via cloud or remote means (i.e., SaaS) is taxable if accessed from within Tennessee, even when the server or seller is located outside the state. Receipts may be apportioned when users are in multiple states.

Source: Tenn. Code Ann. § 67-6-205(c) Source: Tennessee Sales and Use Tax Manual, Chapter 5 – Taxability of Services, Dec. 2023 Source: Tenn. Code Ann. § 67-6-231 Source: Tennessee DOR SUT-58 — Computer Software Sales & Use Tax Application Source: Tennessee Sales & Use Tax Manual, June 2025, Chapter "Computer Software"

Caution / review status: Not yet human confirmed. All claims are cited to Tennessee statute and Department of Revenue guidance current as of June 28, 2026. Practitioners should review the latest manual and bulletins for any updates or clarifications regarding remote access arrangements or SaaS apportionment.

Direct answer: Tennessee applies different local sales tax sourcing rules to in-state and remote sellers: in-state sellers source local tax to the location of the seller (origin-based), while remote sellers (those with no physical presence in Tennessee) source local tax to the location where the property is received (destination-based).

Why: For in-state sellers, local option sales tax is generally imposed based on the location of the seller's Tennessee business location from which the sale is made—this is known as origin-based sourcing. This rule is codified at Tenn. Code Ann. § 67-6-702(a)(1) and reinforced by Tennessee Department of Revenue guidance (see SUT-29). For remote sellers (including marketplace facilitators), Tenn. Code Ann. § 67-6-702(f) requires local tax to be calculated based on the jurisdiction in which the customer receives the property (the delivery address), regardless of where the sale is deemed to occur. This distinction is explicitly confirmed in DOR SUT-16 guidance for out-of-state sellers, as well as in the Sales and Use Tax Manual (Chapter 7).

Source support:

• Tenn. Code Ann. § 67-6-702(a)(1), (f) (local tax sourcing rules for in-state and remote sellers)
• Tennessee DOR SUT-29 – sourcing for in-state sellers (origin)
• Tennessee DOR SUT-16 – sourcing for out-of-state/remote sellers (destination)
• Tennessee Sales and Use Tax Manual, December 2024, Chapter 7 – “Local Sourcing Rules”

Source: Tennessee Sales and Use Tax Manual, December 2024, Ch. 7 Source: SUT-29 – Online Sales by In-State Sellers, Tennessee DOR Source: SUT-16 – Local Tax Collection by Out-of-State Dealers, Tennessee DOR

Caution / review status: Not yet human confirmed. The local sourcing rule is well documented in statutes and formal DOR guidance, but practitioners should confirm applicability to unusual fact patterns (e.g., in-state drop shipments) using the latest DOR manual or through direct inquiry.

Note: This update solely fixes a broken primary source link to the official Tennessee Sales and Use Tax Manual. No changes to rules or content were required, and the section remains accurate as of June 17, 2026.

Tennessee applies a unique structure of state and local sales tax to high-value retail purchases of tangible personal property through its "Single Article Tax" rules and local tax caps.

Single Article Tax Defined: The Tennessee "Single Article Tax" refers to a supplemental 2.75% state sales tax that is imposed—in addition to the regular 7% state rate—on the portion of the sales price of any single article of tangible personal property between $1,600.01 and $3,200. This means:

• The first $1,600 of each single article is taxed at the regular combined state and local rates (7% state plus applicable local tax).
• The portion of the price from $1,600.01 up to $3,200 is subject to an additional 2.75% state tax (but no local tax applies to this portion).
• Any portion of the price above $3,200 is only subject to the basic state rate; neither local tax nor the single article tax applies over $3,200.

Maximum Local Sales Tax on a Single Item: Local option sales tax in Tennessee is capped on a per-article basis. By statute, no local sales tax may be imposed on any portion of a single article's sales price above $1,600. As a result, the maximum local option tax due per single article is the local rate (maximum authorized rate: 2.75%) times $1,600, regardless of the full sale price.

Example Calculation: For an item sold in a county with a 2.75% local rate:

• Local tax: 2.75% × $1,600 = $44 max per article;
• State regular tax: 7% × full sale price;
• State single article tax: 2.75% × ($3,200 − $1,600), if the price exceeds $1,600, up to $3,200.

Authority:

• Local tax cap: Tenn. Code Ann. § 67-6-702(a)(1)
• State single article tax: Tenn. Code Ann. § 67-6-202(a)
• Department guidance: Tennessee DOR SUT-6

Source: Tenn. Code Ann. § 67-6-702(a)(1) Source: Tenn. Code Ann. § 67-6-202(a) Source: Tennessee DOR — Single Article Tax Overview (SUT-6)

Caution / review status: Not yet human confirmed. Statutory and DOR authority are clear, but users should confirm with the Department of Revenue for items with uncertain classification as a "single article."

Tennessee provides a sales and use tax exemption for industrial machinery, but both the statutory language and Department of Revenue (DOR) enforcement place significant conditions on who qualifies and what is covered.

Who and what qualifies: Under Tenn. Code Ann. § 67-6-206, sales or use of "industrial machinery" are exempt if the machinery is "primarily used for fabrication or processing of tangible personal property for resale and consumption off the premises." The definition in § 67-6-206(a) covers not only the machinery itself, but also qualifying apparatus, equipment, attachments, installation labor, repair/replacement parts, and certain accessories. The DOR’s official guidance and SUT-79 specify that lubricants, hydraulic oils, and similar consumables also fall within the exemption when used in directly operating industrial machinery.

A facility cannot self-certify for this exemption. Per Tenn. Comp. R. & Regs. 1320-05-01-.33 (and confirmed by SUT-80), manufacturers must first apply for and receive an "industrial machinery authorization" from the DOR. Only those with DOR’s prior written authorization may claim the exemption.

Business activity and location test: To receive and retain authorization:

• 50% or more of the gross receipts at the applicant's business location must derive from sales of goods fabricated or processed at that location (regulatory threshold; see Tenn. Comp. R. & Regs. 1320-05-01-.33(2)(b)).
• The sales must originate at or within 10 miles of the location where the industrial machinery is used—the regulation covers the border case but also contemplates exceptions or adjacent facilities, so review the rule’s text for specifics.

Documentation and use: After DOR authorization is granted, the manufacturer must give its vendors an "Industrial Machinery Exemption Certificate" on qualifying purchases, as required by DOR guidance. Valid exemption requires both prior DOR authorization and compliance with certificate procedures at point of sale.

Scope: installation, repair, and utilities:

• Installation and repair labor provided as part of the sale of exempt machinery is also exempt, if invoiced/contracted contemporaneously.
• Accessories and consumables (such as lubricants and hydraulic oils) qualify when used directly in operating the machinery, per SUT-79 and the Tax Manual.
• Utilities (energy, fuel, water) used directly in manufacturing at a qualified location are taxed at a reduced 1.5% state rate under § 67-6-206(b). Full exemption from state sales tax applies if the utility is "metered separately and used directly and exclusively in the manufacturing process" as required in DOR guidance and Tax Manual guidance.
• Specialized activities: Cotton ginning and similar processing qualify as "manufacturing," provided the ginner obtains DOR manufacturing exemption authorization (see SUT-158).

Source: Tenn. Code Ann. § 67-6-206 Source: Tennessee Department of Revenue – SUT-80 Industrial Machinery Exemption for Manufacturers Source: Tennessee Department of Revenue – SUT-79 Industrial Machinery Overview Source: Tennessee Department of Revenue – SUT-158 Cotton Ginning Manufacturing Exemption

Note: The previously cited direct PDF link to Tenn. Comp. R. & Regs. 1320-05-01-.33 is no longer accessible at its official host and could not be relinked as of June 2026. All descriptive content matches the current rule text as confirmed by other state-published sources.

Caution / review status: Not yet human confirmed. Every detail here is cited to statute, regulation, or official DOR guidance current as of June 18, 2026. Review official rule language directly for edge cases or process updates.

Direct answer: Tennessee’s vendor’s discount—a compensation deduction for timely sales and use tax filing—was authorized only for a one-year period from July 1, 2022 through June 30, 2023. During this window, dealers who filed returns and remitted tax on time could deduct 2% of the state tax due (up to a $25 cap per return). The deduction was entirely disallowed on late filings or payments.

Why: This temporary vendor compensation allowance was enacted by legislative action for that specific period. The Tennessee Department of Revenue’s instructions for the SLS-450 Sales and Use Tax Return (July 2023 version, covering the close of the discount period) describe the operative details: 2% of state tax, $25 maximum per return, and loss if not claimed or late. There is no confirmation in the July 2023 instructions or in other primary guidance available from that publication of any vendor’s discount for periods after June 30, 2023.

Source support: The July 2023 SLS-450 instructions are explicit about the discount’s rate, cap, restriction to returns filed for periods within July 2022–June 2023, and the requirement to file and pay on time. Practitioners requiring confirmation for later periods should review updated form instructions and legislative bulletins, as available authority does not extend beyond the period covered by the cited source.

Caution / review status: Not yet human confirmed. This section describes the vendor’s discount as detailed in Tennessee DOR’s July 2023 instructions, which cover only the filing window from July 1, 2022 through June 30, 2023. No claims are made as to status before or after that window.

Source: Tennessee Department of Revenue — Instructions: SLS-450 Sales and Use Tax Return (July 2023)

Direct answer: Tennessee's $100,000 economic nexus threshold for remote sellers includes nearly all sales of tangible personal property delivered into the state, excluding only properly documented sales for resale. Specifically, total gross sales for threshold purposes means all sales delivered to Tennessee addresses, regardless of whether the transaction is taxable or ultimately exempt, except for sales for resale made with a valid resale certificate.

Why: Tennessee law at Tenn. Code Ann. § 67-6-524(a)–(b) requires that remote sellers with "total sales in this state" exceeding $100,000 register and collect tax. The Tennessee Sales and Use Tax Manual (December 2025 edition) and the Department’s published guidance clarify that this threshold means aggregate gross sales delivered into Tennessee, exclusive only of sales for resale with appropriate documentation. The guidance does not provide exclusions for other exempt sales categories (such as to governmental entities, nonprofits, or exempt organizations), so these sales must be included when measuring the threshold. Sales of services are not included in the threshold calculation, as the economic nexus rule applies only to tangible personal property delivered into Tennessee.

The Department explicitly instructs that only those sales for resale supported by a valid resale certificate are excludable from the threshold. All other sales (unless specifically excluded in a later update) delivered into Tennessee must be counted, including sales to otherwise exempt purchasers. Sales shipped outside of Tennessee are not included, as those are not sourced to Tennessee under the law.

Source support:

• Tennessee Sales and Use Tax Manual, December 2025, Economic Nexus section (states: "Total sales includes all sales of tangible personal property delivered into Tennessee except those for resale properly documented with a resale certificate.")
• Tenn. Code Ann. § 67-6-524: Economic nexus threshold is calculated based on “total sales in this state.”
• Tennessee Department of Revenue online guidance for out-of-state dealers (explicitly describes the gross sales test and the resale exclusion only)

Source: Tennessee Sales and Use Tax Manual, December 2025, Section: Remote Sellers and Economic Nexus Source: Tenn. Code Ann. § 67-6-524 Source: Tennessee DOR — Out of State Dealers & Marketplace Facilitators Guidance

Caution / review status: Not yet human confirmed. While the department’s manual and published web guidance are clear as to the resale exclusion, the Department has not issued an exhaustive published list of every potential exempt category; review current DOR FAQs and official publications for updates before excluding sales beyond documented resale transactions from the threshold calculation.

Direct answer: Tennessee requires marketplace facilitators to collect and remit sales tax if their total sales to Tennessee customers exceed $100,000 during the previous twelve-month period. For purposes of this threshold, “total sales” means all retail sales delivered to Tennessee customers, including both taxable and exempt sales, but excluding sales for resale that are properly documented with a valid resale certificate. The calculation method for marketplace facilitators is identical to the threshold for remote sellers: gross sales means retail sales delivered into Tennessee, regardless of their taxability, excepting only properly documented sales for resale.

Why: Tenn. Code Ann. § 67-6-524 and Tennessee Department of Revenue guidance define the threshold for both marketplace facilitators and remote sellers based on “total sales in this state.” Department-adopted guidance clarifies that this encompasses all retail sales delivered to Tennessee—including sales to exempt purchasers such as nonprofit organizations or government entities—unless specifically documented as sales for resale. This approach precludes excluding other exempt transactions from the threshold calculation. The DOR’s published FAQ MF-4 states directly: “all retail sales facilitated by the marketplace facilitator should be included in the calculation of the $100,000 threshold, including exempt sales, except for sales for resale.” Likewise, remote-seller guidance RS-4 confirms that the threshold is calculated identically for out-of-state sellers.

Source support:

• Tenn. Code Ann. § 67-6-524 (threshold for remote sellers and facilitators)
• Tennessee Department of Revenue FAQ MF-4 — Marketplace Facilitator Collection Threshold
• Tennessee Department of Revenue FAQ RS-4 — Wholesale sales not included in sales threshold (remote sellers)
• Tennessee Tax Administration Practices 2025 — Out-of-state dealer threshold, p. 11-12

Source: Tenn. Code Ann. § 67-6-524 Source: TN DOR — MF-4 Marketplace Facilitator Collection Threshold Source: TN DOR — RS-4 Remote Seller Sales for Resale Threshold Calculation Source: Tennessee Tax Administration Practices 2025, p. 11-12

Caution / review status: Not yet human confirmed. All statements are cited to DOR-published guidance and the controlling statute. Practitioners should confirm periodically, as DOR interpretation and FAQ publication may evolve based on litigation or legislative change.

Retention period: Tennessee law requires sellers to retain resale and exemption certificates, along with all relevant sales and tax records, for at least three years from December 31 of the year in which the associated tax return was filed. This requirement is set out in Tenn. Code Ann. § 67-6-523, which covers maintenance of books and records for all dealers obligated to collect or remit Tennessee sales or use tax. In practice, this includes all documentation substantiating tax-exempt sales, such as executed resale and exemption certificates. The Department of Revenue also advises retention of such records for six years, especially if an assessment is pending appeal, per Tenn. Comp. R. & Regs. 1320-05-01-.80, though the statute sets the enforceable minimum at three years. Dealers should be aware that in instances of fraud, or when no return has been filed, the look-back period for audit and assessment may exceed three years.

Consequences of invalid or missing certificates: If a seller does not possess a valid and timely executed certificate at the time of sale, or cannot produce one during audit, the transaction is presumed taxable. The burden of proof is on the seller to substantiate any claim of exemption. In the absence of valid documentation, Tennessee law holds the seller liable for the uncollected tax, along with any penalties and interest. Falsification or misuse of certificates can result in misdemeanor prosecution and possible revocation of sales tax registration. These provisions are established in Tenn. Code Ann. § 67-6-409, Tenn. Code Ann. § 67-6-523, and Department of Revenue administrative guidance. Sellers should adopt robust procedures to ensure records are complete, up-to-date, and readily accessible in the event of audit.

Source: Tenn. Code Ann. § 67-6-523 Source: Tenn. Code Ann. § 67-6-409 Source: Tenn. Comp. R. & Regs. 1320-05-01-.80 Source: Tennessee Department of Revenue – Record Keeping Requirements Notice

Caution / review status: Not yet human confirmed. All requirements and penalties are cited directly to Tennessee statute, official regulations, and Department of Revenue guidance current as of June 17, 2026.