Reviewed Date: 11/30/2022
Revenue Class: Local Taxes
Account No.: 31730
Description: Tax on the sale of alcoholic beverages for consumption on the premises.
Authorization: T.C.A. § 57-4-301(c); T.C.A. § 57-4-306
Requirements or Restrictions: N/A
Current Rate: Fifteen percent of the sales price of all alcoholic beverages sold for consumption on the premises.
Frequency of Payment: Monthly.
Late Pay Penalty: N/A
Exemptions: Not applicable to charitable, nonprofit, or political organizations selling alcohol under a special occasion license. T.C.A. § 57-4-301(e). Also exempted from this tax are commercial airlines (but not airline travel clubs), paddlewheel steamboat companies, and passenger trains. T.C.A. § 57-4-301(d).
Collection: State retains the first 50 percent for its general fund and it is earmarked for education; the remaining 50 percent is distributed to the municipality, if collected in an incorporated municipality, or to the county if collected in an unincorporated area. Recent legislation found at T.C.A. § 57-4-306 (b) provides detailed instructions on further distribution and should be reviewed carefully. Determining factors include whether or not municipalities have their own school system (LEA) or special school district (SSA). Also included are compliance, notice and exemption provisions.
Use Restrictions: For premier tourist resorts, the municipality’s percentage must be spent on schools in the municipality. T.C.A. § 57-4-306 (d).