AI-assisted research summary: Some out-of-state sellers who voluntarily register in Tennessee can claim a vendor-compensation deduction, but delinquent reports lose the deduction and Model 1 sellers are excluded.
An out-of-state person making sales in Tennessee, who is not required to register for sales and use tax under applicable law, but who nevertheless voluntarily registers to collect and remit use tax on items of tangible personal property sold to Tennessee customers, shall be allowed, for the purpose of compensating such person in accounting for and remitting the tax, a deduction against taxes due, reported and paid to the department as follows: Two percent (2%) of the first two thousand five hundred dollars ($2,500) on each report; and One and fifteen one-hundredths percent (1.15%) of amounts over two thousand five hundred dollars ($2,500) on each report. No deduction from tax shall be allowed if any such report or payment of tax is delinquent. Notwithstanding subsection (a), a Model 1 seller under the Streamlined Sales and Use Tax Agreement shall not be entitled to the vendor's compensation described in subsection (a). In addition to any compensation that may be provided under subsection (a), the commissioner is authorized to provide the monetary allowances required to be provided by the state to certified service providers and volunteer sellers pursuant to Article VI of the Streamlined Sales and Use Tax Agreement as it may be amended from time to time. The monetary allowances shall be in the form of vendor's compensation allowances that certified service providers or volunteer sellers are permitted to retain from taxes due pursuant to this chapter that are to be collected and remitted to this state on sales of the volunteer seller in this state. The details of the monetary allowances shall, in the case of a Model 1 seller, be outlined in each contract between the Streamlined Sales and Use Tax Agreement governing board and the certified service provider. Vendor's compensation rates on taxes due that may be retained by a volunteer seller that is a Model 2 seller and all other volunteer sellers that are not Model 2 sellers shall be determined by the commissioner in accordance with Article VI of the Streamlined Sales and Use Tax Agreement and the commissioner shall cause the rates and their effective dates to be filed with the secretary of state for publication in the Tennessee Administrative Register. Vendor's compensation rates published in the Tennessee Administrative Register shall remain in effect until new rates determined by the commissioner and published in the Tennessee Administrative Register become effective. For purposes of subsection (d), “volunteer seller” means a seller that registered in this state through the Streamlined Central Registration System for sales and use tax purposes, does not have a fixed business location in this state, and otherwise meets the definition of volunteer seller as defined by the Streamlined Sales and Use Tax governing board and “taxes due” means sales or use tax revenue generated for the state by a volunteer seller pursuant to this chapter.