The same purchase made through the store’s internet website also is subject to those same sales taxes.
Likewise, out-of-state retailers with a physical presence in Tennessee are required to collect and give the state sales tax owed on items purchased.
But businesses without a physical presence in the state making the same sales over the internet are getting a free ride.
The state of Tennessee is looking into terminating that free ride.
A June 2018 U.S. Supreme Court decision overturned that physical presence rule and opened the way for states to expand sales tax collection requirements to more out-of-state sellers, according to an interim report from the Tennessee Advisory Commission on Intergovernmental Relations (TACIR).
The TACIR report recommends the Tennessee General Assembly enable so-called Department of Revenue “Rule 129,” which would require out-of-state sellers with no physical presence in the state and with more than $500,000 in sales in Tennessee to collect and remit sales tax.
“In the future the state should consider lowering this threshold,” the report noted.
A big bundle of cash is at stake.
The report suggests that enforcing the rule would result in the state receiving an additional $160.5 million in state sales tax and local governments getting $59.4 million.
“Local government members of (TACIR) raised concerns about the ability of local governments to sustain current levels of education funding and to implement education-related mandates without this additional revenue source,” the report said.
Those sources interviewed for the report included Kingsport City Attorney Mike Billingsly and Kingsport City Schools Superintendent Dr. Jeff Moorhouse.