Amazon this week begin sending out email notices to Tennessee consumers indicating that they may owe Tennessee use tax on the items they purchased from Amazon. Like most states, Tennessee has a sales and use tax on goods and services purchased from retailers or service providers. Under the Quill Vs. North Dakota ruling, out-of-state retailers did not have to collect or remit sales and use tax on the items that out-of-state consumers purchased from them. However states began passing use tax laws to collect use tax on the out-of-state purchases. Some states have even put a use tax reporting line on their personal income tax returns. In those states, if you don’t report a line for purchase, they will calculate a purchase and tax amount based on your income. Depending on state rules, you should report use tax to the states.
The states are currently working on a proposal called the Stream Line Sales Tax initiative that would require out-state-retailers to collect and remit sales tax on out-of state-purchasers to the state where the consumer lives. Once the states simplify the tax rules and definitions, there is a proposed law in the US Congress that would codify the stream line sales tax initiative. Did you get a tax notice email from Amazon on use tax?
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