No added sales tax for marketplace facilitator fees in Tennessee
There’s good news if you work with marketplace facilitators for sales transactions in The Volunteer State. Both seller fees and service provider fees that facilitators may charge when connecting you to customers aren’t subject to sales tax.
Letter Ruling No. 22-02 from the state Dept. of Revenue discusses a marketplace facilitator that charges various fees to service providers and sellers once sales are finalized with buyers.
Sales tax shouldn’t be assessed on these fees, the department said, because they’re being charged in relation to lead generation and payment processing services, which are both tax-exempt under state law.
While there are some taxable components to the transaction, including the web-based software and app used to finalize the sale, the “true object” of the transaction is facilitating the connection between sellers and buyers, as well as making payment processing easier.
Without that goal, the software and app wouldn’t be useful to any of the parties involved. So the nontaxable elements of the transaction are the most significant, making the fees exempt from tax.
- Share on
Free Training & Resources
Webinars
Provided by Insightsoftware
Webinars
Provided by SkyStem
Further Reading
The last few months of weather’s taken a toll on homes and businesses in many parts of the country. To lighten the load a bit, the IR...
The IRS is extending an olive branch to businesses that received tax credits related to COVID-19 in error. The tax cops are launching a ...
The U.S. Supreme Court (SCOTUS) handed down enough precedent-breaking decisions this spring to make anyone’s head spin. The upshot: B...
No matter where entrepreneurs decide to start a business, they face a variety of taxes and regulations that cut into the bottom line from t...
Who says Democrats and Republicans can’t agree? A few weeks back, Donald Trump advocated for eliminating taxes on tips of workers in ...
Wealthy investors are about to lose a tax loophole that IRS allowed for years. The tax cops say its new policy and enforcement will net bil...
