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Tennessee Consumer Use Tax
Contrary to popular opinion, online and catalog sales are subject to use tax. This tax has been on the law books since 1947 and is the counterpart to the sales tax. When someone buys merchandise online or through a catalog and the seller of the merchandise does not collect sales tax, the consumer who bought the item has a legal obligation to file and pay use tax on the merchandise. The use tax is the same rate as the sales tax.

And, purchasing merchandise outside of Tennessee, whether done physically or electronically, may not exempt someone from paying use tax if an equal amount of sales tax was not paid to another state at the time of purchase.

As an example, if you buy $100.00 worth of food in Kentucky, and you pay no Kentucky sales tax, you owe the State of Tennessee $8.25 in use tax. (Food in our county in Tennessee is taxed at 8.25%.)

If you buy $100.00 worth of non-food items in Kentucky, and you pay $6.00 in Kentucky sales tax, you owe the State of Tennessee $3.25 in use tax. (Non-food items in our county in Tennessee are taxed at 9.25%, but you can subtract the 6% you paid in Kentucky. This leaves a 3.25% use tax payable to Tennessee.)

Please note that Kentucky has sales tax AND income tax. Because Tennessee does not have an income tax, our state has to rely much more on sales tax. This is why it's so important to pay use tax on items brought into Tennessee.

So, how do you file and pay use tax? It’s easy. Click here to download the return. Then follow the instructions, and complete and return with use tax payment to the State of Tennessee Department of Revenue.