Instructions For The Preparation Of The Tennessee Sales And Use Tax Return (Page 2 of 2) in pdf

SCHEDULE A – EXEMPT TRANSACTIONS

The law provides for the deduction from gross sales and purchases those items specifically exempt from tax. Schedule A is used to identify these items. Schedule A, Line

A, is also used to identify the total food sales subject to the 5.00% state tax rate. Any amount claimed as an exemption on Page 1, Line 6 must be itemized on this schedule.

Line A. Include all sales of food and food ingredients that are subject to the 5.00% state tax rate. Add this amount to Schedule B, Line 2.

Line B. Include all sales which were made to vendors or other establishments for resale, or for rental or leasing, and sales of items to be used in processing for sale. These

transactions must be supported by valid certificates of resale, to be retained in the dealer’s files.

Line C. Enter sale of exempt items not deducted elsewhere on Schedule A. Examples include: (1) gasoline, (2) prescription drugs, (3) prescription mobility enhancing

equipment, (4) kerosene dispensed at a blocked pump, and (5) other items specifically exempt by state law. Trade-ins and cash discounts are included in Schedule A, Line I.

Line D. Enter all sales to the federal government, the State of Tennessee, its political subdivisions, and sales to qualified institutions such as churches, nonprofit schools,

hospitals, homes for the aged, and orphanages. Dealers must retain exemption certificates to support exemptions for sales to tax-exempt purchasers.

Line E. Enter amount of taxable items voluntarily returned by the purchaser which have been included in Gross Sales on this or a previous return and for which full credit

is given to the purchaser. Do not include repossessions.

Line F. Enter sales of industrial machinery and agricultural items which have been sold to qualified tax-exempt purchasers. Dealers must retain exemption certificates to

support tax-exempt sales to qualified manufacturers and qualified farmers, nursery operators, and timber harvesters.

Line G. Deduct those sales originating in Tennessee where the purchaser takes possession outside of Tennessee for use or consumption outside this state. Also deduct sales

of motor vehicles and trailers delivered out-of-state by dealers; sales of motor vehicles and boats removed by non-resident purchasers within three (3) days; and sales of

aircraft removed by non-resident purchasers within fifteen (15) days. Dealers must retain affidavits to support non-resident removal of vehicles, boats, and aircraft.

Line H. Enter that portion of the unpaid principle balances due on tangible personal property repossessed from the customer in excess of $500. (See instructions for

Schedule B, Lines 2 and 6, below.)

Line I. Enter deductions authorized by law that are not included elsewhere on Schedule A. Include taxable sales subject to special state tax rates such as water and energy

fuel sold to qualified manufacturers. Do not include food sales. Include: deductions related to sales of manufactured homes; aviation fuel; allowances for trade-in items like

kind and character; and cash discounts given when tax was paid on the gross amount or a previous return. Do not include trade discounts or manufacturers’ coupons.

Line J: Enter the total amount of sales not subject to tax during the annual August Sales Tax Holiday.

Line K. Add the amounts appearing on Lines A through J and enter on this line. This total must also be entered on Page 1,

Line

6 of the return.

SCHEDULE B – COMPUTATION OF LOCAL SALES AND USE TAX

Use this schedule if local taxable sales do not equal state taxable sales. (This will occur if transactions include energy fuel sales, “single article” sales subject to a maximum

local tax, food or food ingredients subject to the state tax rate of 5.00%, or other items requiring an adjustment of tax.)

Line 1. Enter net taxable sales from Page 1, Line 7.

Line 2. Add items used and subject to local tax on which state tax only has been paid to supplier. Add the amount of food sales from Schedule A, Line A. Add amounts that

exceed the single article base on returned merchandise included in Schedule A, Line E. Also, add amount shown on Schedule A, Line H for repossessions. (See instructions

for Schedule B, Line 6.) Also add other deductions taken in Schedule A, for state tax purposes that are not deductible for local tax purposes.

Line 3. Add Lines 1 and 2.

Line 4. Enter the total of the amounts in excess of the maximum on each single article sold which have not been deducted elsewhere. Also, enter any amounts in excess of

the maximum per single article purchased and reported for use tax on this return. (See Page 1, Line 10 for the single article tax base.)

Line 5. Enter energy fuel sales not included elsewhere on the return. Include only taxable sales of energy fuel subject to full state tax.

Line 6. Enter other qualified local tax deduction amounts not reported on Lines 4 and 5. Include taxable sales of specified digital products subject to 2.5% local tax rate. A

deduction maybe taken on this line to receive credit of a portion of the local option tax previously paid on repossessed tangible personal property.

Line 7. Deduct the total of the entries on Lines 4, 5, and 6 from the amount on

Line

3. Enter the result on this line. This becomes the base for the local option tax.

Line 8. Multiply Line 7 by the local tax rate shown on Line 10 on the front of the return. Enter the amount of local tax due on this line and on Page 1, Line 10.

SCHEDULE C – STATE SINGLE ARTICLE TAX AND SPECIAL RATES ON ENERGY, WATER, & SPECIFIED DIGITAL PRODUCTS

Line 1. Enter the total sales from $1,601 through $3,200 on the sales price of all single articles sold.

Line 2. Multiply the amount on Schedule C, Line 1 by 2.75% (.0275) and enter the result.

Line 3. Enter taxable amount of sales of water subject to the reduced state tax rate of 1% and the local tax rate of ½ of 1% (.005) sold to qualified manufacturers.

Manufacturers that did not pay tax to their suppliers must enter purchases of water subject to the reduced industrial tax rates. Also, see Schedule C, Line 8.

Line 4. Enter 1% of Line 3.

Line 5. Enter taxable amount of sales of energy fuel subject to the reduced state tax rate of 1.5% sold to qualified manufacturers. Manufacturers that did not pay tax to their

suppliers must enter purchases of energy fuel subject to the reduced industrial rate.

Line 6. Enter 1.5% of Line 5.

Line 7. Enter the total of Lines 2, 4, and 6 on this line and on Page 1, Line 12.

Line 8. Water local tax industrial rate – Multiply the amount on Schedule C, Line 3 by ½ of 1% (.005) and enter.

Line 9. Specified digital products local tax rate – Include on the blank line the amount of taxable sales of specialized digital products. Multiply the taxable sales amount by

2.50% and enter the local tax amount on Schedule C, Line 9.

Line 10. Add the amounts on Lines 8 and 9. Enter the amount here and on Page 1, Line 13, reverse side.