“Born on a mountain top in Tennessee, greenest state in the land of the free
Raised in the woods so he knew every tree, kilt him a b’ar (bear) when he was only three…1” That’s from the Ballad of Davy Crockett who claimed to be born on a mountain top in East Tennessee in 1786, he became an American folk hero, frontiersman, soldier, and politician, and has typically been characterized as wearing a ‘coonskin’ cap (made from a raccoon hide).
Crockett stands among the greatest leaders of Tennessee and is affectionately referred to as ‘King of the Wild Frontier’ (made popular when the Ballad was set to music by Walt Disney for first a movie feature and later a television series.) But while the ‘legend’ of Crockett is known by many the reality is this man was elected to the U.S. Congress in 1825 where he vehemently opposed many of the policies of another man of colorful history from Tennessee, Andrew Jackson who was then President of the United State. In fact Tennessee is nicknamed the Volunteer State on behalf of volunteer soldiers who fought with General Andrew Jackson during the Battle of New Orleans in the War of 1812.
Tennessee is the 36th largest state, and the 17th most populous with more than 6.5-million residents. Tennessee means “The Meeting Place,” derived from the Yuchi Indian word “Tana-see.” Tennessee ties with Missouri for having the most bordering neighbor states (8). The Copper Basin, a stark landscape caused by mining practices, is so distinct that it can easily be recognized from space by astronauts.
Even though Nashville is the state’s capital, it is the 2nd largest city; Memphis is larger with a population that approximates 10% of the state. While most people think of the Grand Old Opry or Country Music Hall of Fame when Nashville is spoke of, but I will forever remember The Hermitage, the home and site of entombment of President Jackson and his beloved wife ‘Rachel’ for whom Jackson actually won a dual of Pistols at 20 paces.
But we can’t talk ‘giants’ of Tennessee with talking about ‘the King’ (the King of Rock-n-roll) of course, Elvis Presley whose home Graceland is one of the major tourist attractions of Memphis, ranking right up there with ‘Memphis style BBQ ribs’. Even though BBQ is the biggest single food draw in Memphis (and all of Tennessee) Elvis seemed to prefer his signature peanut butter and banana sandwich served warm similar to a grilled cheese.
So about now you are beginning to wonder when I am going to get started talking about Sales Taxes in Tennessee. Well here is a tip, if you are looking to hide out from the Tennessee tax man, the state is home to more than 9600 caves, more than any other state in the United States.
Perhaps all those caves, along with the dense woods, is the reason that from both a historical basis and even today, Tennessee is the capital of 'bootlegging'. Tennessee Moonshine became so popular that today, you can actually purchase 'legal varieties' of the stuff; seems like an oxymoron to me 'Legal Moonshine'. And of course, one of the primary reasons for the existence of Moonshine was to avoid alcohol related taxes and taxes (including sales tax) all together. In fact, the complexity of the Tennessee laws as they relate to 'everything to do with' alcohol, may have something to do with still the level of bootlegging activity going on today.
So now we have worked all the way from a lone mountain top cabin to Jackson's Hermitage, to Country Music's Ryman Auditorium, Elvis' Graceland, fantastic BBQ, and the Tennessee tax man. And the bad news, the 'tax man' will be standing at all of them with his hand out to collect one of the highest state and local sales tax bills in the country.
About Sales Taxes and this series:
Thanks to Avalara, the 'tax people', this article is one in our 50 part "Sales Tax Tuesday" series covering sales tax issues associated with each and every state tax jurisdiction in the United States. Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it.
From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
Sales Tax Facts2:
- Tennessee is one of the top five states with the highest combined state and local tax rates. The state sales tax rate is currently 7.0% but the total tax rate can be as high as 9.75% depending on local taxes imposed.
- The state’s chief tax collector is the Tennessee Department of Revenue.
- Sales tax in Tennessee is origin-based, meaning the tax rate is determined by the seller’s location. Sellers in origin-based state are required to charge the same sales tax rate for every order shipped to that state.
- Taxable goods delivered to buyers in Tennessee are subject to sales and use tax. Some services are also subject to sales tax. Online and catalog sales are subject to use tax in Tennessee
- Tennessee is an associate member of Streamlined Sales Tax (SST)
- Tennessee offers sales tax holidays for three days in August on clothing, school supplies and computers.
- Tennessee’s intoxicating liquor laws are some of the most confusing in the nation, with hundreds of provisions regulating the production, distribution, sale and taxation of liquor, wine and beer in the state. The highly debated WIGS (wine in grocery stores) legislation will go into effect in July 2016.
Tennessee taxation is just weird, for example:
Beauty is in the eye of the “be-older.” Admission fees to beauty pageants that have existed in the same city in Tennessee for 30 years or more are tax-exempt; but for those beauty pageants organized within the last 30 years, admission fees are taxable.
And as if that isn't enough of a 'twist', remember Davy Crockett's coonskin cap, well in Tennessee, dead animals that are stuffed are exempt from sales tax as are dead animals that are eaten by other animals. However, dead animals that are eaten by humans are taxed. Old Davy wouldn't have owed on tax on his 'attire' which he 'tanned' (a form of taxidermy that precludes taxation) but the portions of the animal he put in his pot of stew, you got that right, the tax man wants his share.
When you have to know which parts of the animal are taxable, or how to tax the annual pageant, it seems like you might just make a mistake, and that's true of sales tax in general, no matter what state you live or work in. Manual sales and use tax management is prone to error and consumes staff time in pass-through rather than revenue-generating activities. Avalara offers a variety of solutions that provide sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting.
Automation via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity, so you don't have to 'kilt you a b'ar (bear) when you are only three." in order to survive the tax wilderness.
Sources:
1 - The Ballad of Davy Crockett Lyrics by Davy Crockett from Classic Disney, The Walt Disney Company.
2 - Sales Tax Facts - Tennessee, Avalara, May, 2015, Robin Conner, Sr. Marketing Manager at Avalara.