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Taxes Commonly Investigated by Special Investigations

Many Special Investigations (SI) cases relate to sales and use tax, because that tax is the largest revenue generator for the state. Sales tax is collected by the seller on all retail sales, leases and rentals of most goods, as well as certain taxable services. Each month, the retailer is required to accurately report and remit sales tax collected from consumers. Most of the sales tax revenue collected from consumers and remitted by businesses goes back to local communities to fund schools, roads and local government operations.

Unscrupulous business owners who file false tax returns and steal tax dollars consumers pay them hurt local communities and honest business owners, and they commit a felony crime.  Since dishonest people are not paying their fair share, there is not a level playing field for businesses or consumers.

Use tax is applied when merchandise is purchased from outside Tennessee and imported into the state for use or consumption. The person or business who imports the merchandise for use or consumption is responsible for remitting the tax. Use tax is also applied to vehicles, boats, and aircraft purchased from individuals. Providing false purchase price information to county clerks is a crime that SI aggressively pursues. 

Special Investigations investigates businesses who fail to register for and remit this tax.

For franchise tax, Special Investigations (SI) investigates evasion by individuals or corporations who willfully understate their net worth or the value of their real and tangible property in Tennessee. For excise tax, SI investigates evasion by individuals or corporations who deliberately understate the amount of Tennessee taxable income.

These violations include the illegal sales of unstamped cigarettes, smuggling or hijacking cigarettes, counterfeiting tax stamps or other attempts to circumvent the state tobacco tax and Master Settlement Agreement. This also includes violations of the Unfair Trade Laws in Tennessee.

Special Investigations investigates intentional circumvention of state motor fuel tax laws by persons in the trucking industry, motor fuel distributors, retail establishments and individuals.

Special Investigations investigates potential evasion of this tax when sellers of alcohol falsely understate the amount of alcohol sold.

This tax is collected by bail bondsmen from the person that posts the bond on behalf of the accused. The tax must be paid to the bondsman before the bond is written. Special Investigations investigates allegations of bond companies intentionally underreporting the number of bonds written each quarter.