Original Author: O'Hara, Stephanie Allen
Date of Material: 11/02/2022
Taxes--Businesses and professions--Tennessee--Directories
Licenses and permits--Laws and regulations
MTAS Legal Consultant Stephanie Allen O'Hara responded to a request for information regarding the necessity of a business license.
MTAS received the following inquiry regarding the necessity of a business license:
Our client is a satellite television provider that is providing leased equipment (tv boxes, etc) to customers located within your jurisdiction.
Our client does not have a physical office located within your jurisdiction. Does the presence of their leased equipment, which produces revenue in your jurisdiction through monthly payments, trigger the need for a business license, or the equivalent? Is this considered doing business in your jurisdiction? We would appreciate if you could provide us with justification, based on your local requirements, as to why or why not.
Please let us know if you require any additional information or clarification.
My contact with the Tennessee Department of Revenue confirmed my interpretation of the statutory requirements. Tennessee Code Annotated § 67-4-706(a) provides the following regarding business licenses:
(a) For purposes of filing the returns required by § 67-4-715 and paying the taxes levied by §§ 67-4-704 and 67-4-705, every person taxable under §§ 67-4-704 and 67-4-705 shall, prior to engaging in business as defined in § 67-4-702, register with the commissioner or the county clerk, in the case of businesses located within the county, and with the commissioner or the appropriate city official, in the case of businesses located within the incorporated municipality. Any person that is subject to the tax levied by § 67-4-704 but has no established physical location, outlet, or other place of business in the state shall register with the commissioner for purposes of this section.
As found in the Tennessee Business Tax Manual (Aug. 2022 edition), “[p]roviders of direct-to-home satellite television programming services are specifically excluded from both the state-level and municipal-level business tax” per Tennessee Code Annotated § 67-4-704(b). The Business Tax Manual also provides that Tennessee Code Annotated § 67-4-705(d) excludes “sales of the providers’ services as well as sales of any tangible personal property” from the same business taxes. Therefore, since the provider is not subject to paying taxes under Tennessee Code Annotated §§ 67-4-704 or 67-4-705, Tennessee Code Annotated § 67-4-706 does not apply and does not require this provider to register for a business license.