Sales Tax Nexus and Amazon Laws – HB2370 Passes in Tennessee

When sales tax laws were first framed almost 100 years ago, no one considered the implications of Amazon and their affiliates on sales tax nexus and sales tax revenue.  Sales tax nexus was a simple matter to determine.  You didn’t need to engage a sales tax consulting firm to figure out if taxes needed to be collected and remitted.

As states continue to lose revenue to Amazon and other online retailers, sales tax nexus has become a significant issue.  Tennessee, a state that does not tax wages and salaries, relies on sales tax revenue.  Tennessee recently passed HB2370 in an effort to capture more tax from internet sales. Here’s an excerpt of Tennessee’s new law:

“This bill specifies that the activities of a business's affiliates in Tennessee, including the sale of tangible personal property for resale and other non-retail activities, may not be considered in determining whether the person has a physical presence in Tennessee sufficient to establish nexus for sales and use tax purposes. However, this provision would not apply to an affiliate that performs, within Tennessee, the following retail activities on behalf of a business…”

Not exactly straightforward and easy to understand.  You can read the entire bill here:  TN HB 2370

This is just one example of how interpretive sales tax statutes can be and illustrative of the need for sales tax consulting in certain situations.  At TaxConnex, we offer sales tax consulting and can help you figure out issues like sales tax nexus, sales tax audits, voluntary disclosure agreements and more.