Knowledgebase-Transient Merchants


Information Product

Title:Transient Merchants
Summary:MTAS was asked whether the city can charge transient merchants higher taxes than the statute governing transient merchants provides, or impose upon them a stiff permit fee.
Original Author:Hemsley, Sid
Co-Author:
Product Create Date:12/01/92
Last Reviewed on::05/05/2017
Subject:Businesses--Laws and regulations; Tax collection; Tax equity
Type:Legal Opinion
Legal Opinion:

Reference Documents:

Text of Document: December 1, 1992

Your question is, can the city charge transient merchants higher taxes than the statute governing transient merchants provides, or impose upon them a stiff permit fee? The answer in both cases is no.

Tennessee Code Annotated, 67-4-702(a)(22) defines what a "transient vendor" is and is not:

"Transient vendor" means any person who brings into temporary premises and exhibits stocks of merchandise to the public for the purpose of selling or offering to sell the merchandise to the public. "Transient vendor" does not include any person selling goods by sample, brochure, or sale catalog for future delivery; or to sales resulting from the prior invitation to the seller by the owner or occupant of a residence. For the purposes of this definition, "merchandise" means any consumer item, that is or is represented to be new or not previously owned by a consumer, and "temporary premises" means any public or quasi-public place, including a hotel, rooming house, storeroom, building or part of a building, tent, vacant lot, railroad car or motor vehicle which is temporarily occupied for the purpose of exhibiting stocks of merchandise to the public. Premises are not temporary if the same person has conducted business at those premises for more than six (6) consecutive months or has occupied the premises as his permanent residence for more than six (6) consecutive months.

The tax prescribed for a transient vendor is set out in Tennessee Code Annotated, 67-4-710 (a)(2). That statute declares that "Transient vendors shall pay a tax of fifty dollars ($50.00) for each fourteen-day period in each county or municipality, or both, in which such vendors sell or offer to sell merchandise, or for which they are issued a business license..." The same statute goes on to provide that transient vendors shall not be liable for the gross receipts portion of the business tax.
That is the state statutory tax scheme set out for transient vendors; a municipality has no authority to prescribe a higher tax.

Tennessee Code Annotated, 62-30-101 et seq. defines a "transitory vendor" in terms similar to the definition of "transient vendor" found in Tennessee Code Annotated, 67-4-702, and provides that transitory vendors have to obtain a permit from the county clerk at a cost of $50.00. It isn't clear whether this statute applies to transitory vendors who do business within the limits of a municipality, or if it does, whether that permit fee is the exclusive permit fee that can be charged.

In my opinion, that statute applies only to transitory vendors operating in the county, and doesn't foreclose a municipality from requiring a transient vendor operating in the city to obtain a permit from a municipality at a similar cost. But I think if the cost of the permit goes much further beyond that, it would be held to be excessive. I was told that the amount of the fee proposed could go as high as $250.00. Permit fees have to be reasonably related to the cost of administering the permit system, and it is difficult to defend a permit fee of that magnitude. In no case should the permit fee discriminate against transient vendors.

Let me know if I can help you further in this or any other matter.

Sincerely,

Sidney D. Hemsley
Senior Law Consultant
SDH/

Please remember that these legal opinions were written based on the facts of a given city at a certain time. The laws referenced in any opinion may have changed or may not be applicable to your city or circumstances.

Always consult with your city attorney or an MTAS consultant before taking any action based on information contained in this database.