Professional service companies are the object of the Department’s enhanced compliance efforts. In an effort to discover unpaid use tax liabilities, the DOR is currently contacting many professional service firms to review their records for use tax underpayments. Use tax is due on the cost of equipment and supplies that a professional service firm purchases outside of Tennessee without payment of tax.
The Department has also identified another area of use tax non-compliance resulting from the underreporting of the sales price on the transfer of vehicles and boats between individuals. A 100% penalty may be imposed on the underpayment of tax. The DOR is also increasing its efforts to collect delinquent business taxes by contacting companies that have not filed business tax returns for past years.
Tennessee’s Voluntary Disclosure Program is also being publicized. This program affords businesses and consumers the opportunity to report past tax liabilities and register for Tennessee taxation. The program applies to all taxes administered by the DOR and its benefits include limitation of prior liability and abatement of penalty. A taxpayer must not have been previously contacted by the Department in order to be eligible for the program.
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