If you own a business in Tennessee or want to sell products to residents of the state, you may be asking whether you must add sales tax to shipping costs. The response is that it depends on the situation. Sales tax is typically applied in Tennessee to the sale of tangible personal property and some services. However, there are a few exclusions and unique regulations in relation to freight prices.
The Tennessee Department of Revenue states that there is no sales tax owed on the costs associated with shipping goods outside of Tennessee or to a place inside Tennessee that is more than 50 miles away from the seller’s location. In other words, you are not required to collect sales tax on the freight if you are sending items to a consumer who lives more than 50 miles away from you. However, you must collect sales tax on the freight charges if the customer is situated within 50 miles of your company.
It’s important to remember that this exemption only covers the actual transportation costs, not the price of the items being transported. Therefore, even if you are not required to charge sales tax on the cost of shipping, you must still collect sales tax if you are selling a tangible good and billing for shipment.
Moving on to the second query, you might be pondering whether you require a tax ID if you intend to sell on Etsy. No, you don’t need a tax ID to sell on Etsy, is the quick response. However, if you’re doing business in Tennessee and have a physical presence there, you might need to apply for a sales tax permit or receive a tax ID. This can entail having a business there, a warehouse, or staff.
Do you have to pay taxes on Etsy purchases in relation to this? The location of both you and your consumers will determine the response. Online marketplaces like Etsy are now required by many states to collect and pay sales tax on behalf of its merchants. Etsy will begin collecting sales tax on behalf of merchants in 2021 for orders going to specific states, like Tennessee. You must ensure that you are registered to collect sales tax in Tennessee and that the rate you are charging is appropriate for your location if you are an Etsy seller.
What is Memphis, Tennessee’s sales tax, to finish? Shelby County, Tennessee, where Memphis is situated, has a 9.75% state and local sales tax rate. This comprises a 7% state sales tax, a 1.75 percent county tax, and a 1% municipal option tax. Remember that this rate may change depending on the specific Memphis location and the commodities being sold.
In conclusion, it’s critical to comprehend the applicable sales tax laws and regulations if you’re conducting business in Tennessee or selling on Etsy. Although the regulations for adding sales tax on freight can be a little confusing, it’s crucial to make sure you’re collecting the right amount now to avoid any problems later. And to make sure you’re in compliance, if you’re a Tennessee-based Etsy seller, be sure to stay up to date on any changes to the state’s sales tax regulations.