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Sales Tax collection relies on ‘honor system’


Sales tax collection has remained a hot topic with the proposed Farragut Public Market, which could house more than 200 vendors, each responsible for reporting their own Sales Tax.

“Everyone in this company would be responsible for collecting and paying Sales Tax,” Developer Charles Atchley Sr. said in a previous interview with farragutpress.

The town of Farragut draws most of its revenue from Sales Tax.

According to Tennessee Department of Revenue spokesperson Sara Jo Houghland, “In general, Sales Tax is imposed on all retail sales, leases and rentals of most goods, as well as taxable services.”


“Persons selling taxable goods and services collect the tax at the time of purchase and remit the collections to the department on a regular basis,” she said in an e-mail.

Business owners, or in this case vendors, are required to register with the Department of Revenue and subsequently report Sales Tax.

Atchley has said the Public Market would not provide oversight on Sales Tax collections or reporting, no more than a mall would for its various tenants.

“I’m a mall operator. I rent real estate. … We don’t keep up with their sales. They are a business. We don’t audit their business, just like a mall would not audit Wal-Mart’s or Sears’ business,” Atchley said.

“We want only the best tenants, so if we find the tenant is not good for the company, we will not continue to rent to them,” he added.

According to the DOR’s “Sales and Use Tax Guide,” flea market vendors are required to register with the DOR annually, quarterly or monthly.

Flea market operators are responsible for ensuring all their dealers are properly registered. Depending on how often each vendor registers, Sales Tax is due at different intervals during the year. Should any vendor not remit his tax, that tax is delinquent.

“The penalty to the dealer will be $10 per booth per day for violations of tax remittance requirements. The department may also impose a penalty upon the flea market operator of $10 per booth per day, up to a maximum fine of $100 per day at any location where it is determined by the commissioner that the flea market operator has been negligent in allowing dealers to operate at the flea market without proper registration,” the Guide states.

Houghland said Sales Tax reports may be audited, and that process is unique to each case.

“Every taxpayer is unique, and the exact audit methodology will vary depending upon the taxpayer’s industry [and] record keeping,” she said.

“Sales and use tax audits may involve a detailed review — 100 percent of transactions during the specified period — or may involve the use of sampling techniques, including statistical sampling. 

“Frequent areas of focus include verifying reported exempt sales and ensuring that taxpayers have paid sales and use tax on all tangible personal property used by them in Tennessee,” she added.

For more information on Sales Tax reporting or auditing, visit www.state.tn.us/revenue/

 

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