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 6% 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 5.5% 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, but are not limited to (1) fertilizer and field and garden seed for farm

purposes, (2) gasoline, (3) livestock and poultry feeds, (4) prescription drugs, and (5) other items specifically exempt by state law. Also include allowances for trade-in

items of like kind and character. Dealers must keep documentation. Any other deductions authorized by law must be explained here. Also enter the amount of actual cash

discounts taken where tax was paid on gross. Do not include trade discounts.

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. These transactions must be supported by proper exemption certificates retained in the dealer’s files.

Line E. Include only 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 farm machinery and industrial machinery which have been sold to qualified exempt purchasers. These transactions must be supported by proper

exemption certificates that must be retained in the dealer’s files.

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 and sales of motor vehicles and boats removed by non-resident purchasers within three (3) days. Non-

resident removals must be supported by three-day removal affidavits in the dealer’s files.

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

Schedule B, Lines 2 and 6, below.)

Line I. Enter the total of all sales not subject to full state tax and sales made to manufacturers and farm users. Do not include commercial energy fuel sales.

Line J: Enter the total of all sales not subject to tax during the annual Sales Tax Holiday, from 12:01 a.m. on the first Friday of August through 11:59 p.m. on the

following Sunday of August. Also include qualified sales made during the one-time Sales Tax Holiday, from April 25 through April 27, 2008.

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 5.5%, 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 from Schedule A, Line A with any amounts included in

Schedule A, Line E, that exceed the single article tax base. Also add any amount shown on Schedule A, Line H. (See instructions for Schedule B, Line 6.) Also include

any 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.

Line 6. Enter amount of qualified local tax deduction not reported on lines 4 and 5. An explanation must be given. For some repossessions, a deduction on this line may be

authorized for a 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 REDUCED RATES ON ENERGY & WATER

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. Dealers must enter the amount of water sales to manufacturers for which the reduced rate of 1% state tax has been collected. Manufacturers purchasing water must

enter the amount of water purchased at the reduced rate that has not been previously reported to the supplier. The portion of this amount subject to reduced local tax will

also be entered on Schedule C, Line 8.

Line 4. Enter 1% of Line 3.

Line 5. Dealers must enter the amount of energy fuel sales to users that are authorized for the reduced rate of state tax (1.5%) for which the tax has been collected. Manu-

facturers must enter the amount of purchases of energy fuel that are authorized for the reduced rate of state tax (1.5%) for which the taxes have not been paid to suppliers.

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. Enter the amount of water sales or purchases subject to the reduced local tax that are included in the amount reported on Schedule C, Line 3.

Line 9. Multiply the amount on Line 8 by ½ of 1%. Enter the amount here and on Page 1, Line 13.

Instructions For The Preparation Of The Tennessee Sales And Use Tax Return Page 2

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