The Department of Revenue is aware that some Internet retailers recently sent some Tennessee taxpayers electronic notices about use tax they may owe on purchases made in 2013. These Internet retailers are complying with a state law passed in 2012 that requires them to send out these notices.
Tennessee taxpayers should pay attention to these notices because they have an obligation to pay use tax under state law. Payment of the tax is not optional, and the notice should not be ignored. Taxpayers can file their use tax returns here.
Tennessee, like other states that impose a sales tax, also taxes the use of property that is brought into the state that is untaxed when purchased. This use tax is the counterpart to the sales tax. It is applied when merchandise is purchased from outside the state and imported into the state for use or consumption. It applies to Internet purchases where sales tax has not already been collected.
The purpose of the use tax is not only to raise revenue, but also to protect local merchants, who must collect the sales tax, from unfair competition from out-of-state sellers who do not collect Tennessee's sales tax.