Knowledgebase-Sales Tax on Merchandise Sold by City at an Annual Festival


Information Product

Title:Sales Tax on Merchandise Sold by City at an Annual Festival
Summary:If a city sells t-shirts at a festival for a temporary period on an annual basis, these sales do not constitute “engaging in business” in Tennessee, and would not be subject to the sales and use tax.
Original Author:Marshall, Grant
Co-Author:
Product Create Date:05/27/2016
Last Reviewed on::10/28/2016
Subject:Taxes--Sales--Tennessee; Festivals and celebrations; Revenue sources--Municipal--Tennessee; Taxation--Municipal; Tax exempt organizations; Tax collection; Taxes--Sales
Type:Legal Opinion
Legal Opinion: Sales Tax on Merchandise Sold by City at an Annual Festival.docxSales Tax on Merchandise Sold by City at an Annual Festival.docx

Reference Documents:

Text of Document: May 26, 2016

TO: Greg Cothron
Assistant General Counsel
Comptroller of the Treasury
Office of General Counsel
505 Deaderick Street, Suite 1700
Nashville, TN 37243
615 747-5246

Greg,

Thanks for reaching out with your question. You asked whether a municipality that holds an annual festival where it sells t-shirts in conjunction with the festival is subject to sales and use tax on those sales.

These sales are not subject to sales and use tax pursuant to Tenn. Code Ann. 67-6-201 & -102(8)(B) (2013 & Supp. 2015).

The Tennessee sales tax is a tax on the privilege of engaging in the business of selling tangible personal property at retail in the state. Tenn. Code Ann. 67-6-201. The term “business” does not include “occasional and isolated sales” by a person not regularly engaged in business. The definition of “business” further excludes persons making temporary sales on a semiannual or less frequent basis. Tenn. Code Ann. 67-6-102(8)(B). A sales period is presumed to be temporary if it is of 30 consecutive days duration or less. Tenn. Comp. R. & Regs. 1320-5-1-.09(4).

Therefore, if a city sells t-shirts at a festival for a temporary period on an annual basis, these sales do not constitute “engaging in business” in Tennessee, and would not be subject to the sales and use tax.

I hope this helps. Please let me know if you have any other questions.


Grant Marshall | Assistant General Counsel
Andrew Jackson Building, 11th Floor
500 Deaderick Street, Nashville, TN 37242
p. 615-532-2888 f. 615-532-7346
grant.marshall@tn.gov
tn.gov/revenue

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