|Business License & Tax|
The following information is designed to inform you of Business Tax in general. It is not intended to completely address the lengthy and complex business tax laws and regulations.
Business Tax is administered by the Tennessee Department of Revenue. Business Tax is classified as a privilege tax for the right to do business within the counties and cities of Tennessee.
WHO IS REQUIRED TO HAVE A LICENSE?
The owners or operators of all for-profit businesses, except manufacturers and specific business professionals, must pay the local business tax for each place of business located in the county and /or the city which collects the business tax. If both the county and the city levy the tax, the business may be liable for both.
HOW DO I OBTAIN A BUSINESS LICENSE?
When applying for a business tax license, you must provide the following:
Also when applying, you will be required to give your dominant business activity of item(s) sold or services rendered that will generate the most sales and/or revenues. This office will properly classify you according to your dominant business activity. Business tax has four (4) different classifications, each with its own tax period and its own tax rate, as shown below. Each classification contains a variety of businesses.
Effective September 1, 2002, Chapter 856 of the Public Acts of 2002 amends the Business Tax by increasing the Business Tax rates.
Class 1 Taxable Period is from 01/01 to 12/31, and the Due Date is 02/28 The *Retail Tax Rate is 1/10 & 1/20 of 1% and the *Wholesale Tax Rate is 1/40 & 3/80 of 1%
Class 2 Taxable Period is from 04/01 to 03/31, and the Due Date is 05/31 The Retail Tax Rate is 3/20 of 1% and the Wholesale Tax Rate is 3/80 of 1%
Class 3 Taxable Period is from 07/01 to 06/30, and the Due Date is 08/31. The Retail Tax Rate is 3/16 of 1% and the Wholesale Tax Rate is 3/80 of 1%
Class 4 Taxable Period is from 10/01 to 09/30, and the Due Date is 11/30 . The Retail Tax Rate is 1/10 of 1% and there are no Wholesale Tax Rates for class 4
* Tax rate depends on type of business in this classification
You are required to complete the form, provide the total gross sales and/or revenues for items sold and services rendered, apply the appropriate tax rate(s) and return the form with payment by the assigned due date. A business can apply both the retail and the wholesale rates to the gross sales. Retail sales are sales to users or consumers who do not resale. Wholesale sales are sales to retailers who resale to users or consumers. If a business has both retail and wholesale sales, then the business can separate its sales accordingly if each type of sale accounts for at least 21% of the total gross sales. In other words, if wholesale sales make up less than 21% of the gross sales, then they are treated as 100% retail sales, and vice versa.
APPLICATION FOR NEW BUSINESS LICENSE AND THE LICENSE AND TAX REPORT
You may apply online by filling out an online form and pay using a VISA or MasterCard. Also, the "Application for New Business Tax License" form is available for download and/or printing as well as the "License and Tax Report" form, the "Deduction Sheet," and the "Instruction Sheet." The FREE Adobe Acrobat Reader is required to view/print this document from www.tn.gov/revenue. Phone 1-800-342-1003
TRANSIENT VENDOR LICENSE
A person/business selling or offering to sell new merchandise to the public on temporary premises and does not have a permanent, fixed location in Tennessee where the business is conducted is considered a transient vendor. A transient vendor can be both a Tennessee resident or an out of Tennessee resident. A transient vendor is required to obtain a 14-day permit from this office to conduct business in this county and/or city. If the permit expires prior to the scheduled ending date, then a new permit must be obtained for an additional 14 days. You may also apply online.
HELP DESK FOR FILING AND RENEWING
You may contact this office in person or by telephone for general assistance in the issuing of new licenses. For additional information please contact (865) 453-5502.
WHY SOME BUSINESSES ARE AUDITED
All businesses subject to business tax must keep and preserve records showing the gross sales and any other books of account needed to determine the amount of tax due. All such books and records shall be open to inspection at all reasonable hours by this office, and are subject to an audit. Audits are performed to ensure the proper payment of business tax, as well as, the understanding of the tax by the taxpayers. Audit candidates are normally chosen randomly. However, if several businesses in a specific industry do not have an understanding of the law, audits may be performed primarily to assist. By reviewing the records and obtaining an understanding of a specific business, the audit results will determine if the gross sales reported are accurate; the proper deductions are taken; the wholesale and/or retail rate should be applied/ all the appropriate credits are applied; the business is required to pay the business tax; as well as, other findings. Some audits may result in a finding of overpayment of the business tax and a refund may be due.
ANSWERS TO FREQUENTLY ASKED QUESTIONS
The fee for a Sevier County business license is $15.00.
The report of gross sales, payment of taxes, a renewal of licenses are due in this office within two (2) months after the license expires.
Both penalty and interest are charged on delinquent returns.
Final business tax returns are due within 15 days of termination, sale or closing of a business.
If a business tax license is obtained yet the business never started, please notify this office if your business changes or business mailing address changes.