Retail Accountability Program
Purpose of the Retail Accountability Program
The purpose of the Retail Accountability Program (RAP) is to ensure sales tax collected from consumers is submitted to the state of Tennessee. These collections finance services for our citizens. Of every dollar in sales tax a customer pays to a retailer, 56 cents is spent on K-12 education. Another 16 cents is returned to local governments. The remainder is spent on other state services, including health and safety. RAP was also designed to ensure a level playing field for businesses by protecting compliant retailers from the unfair advantage gained by non-compliant retailers who have collected the sales tax from citizens and kept it.
How the Program Works
The program began when legislation was passed in 2012 that required wholesalers of beer and tobacco products to file an information report electronically with the Department. That program is working well. The reports have allowed the Department to review a large number of retail sales tax accounts and identify under-reporting quickly. The identification of the non-compliance has led to over $60 million in additional sales tax collections through the end of 2015.
The Role of Retailers
The Retail Accountability Program does not add any requirements for retailers. Retailers should continue to file and remit their sales tax returns to the state, as they always have. If retailers file and remit their sales taxes properly to the state, they will not be impacted by this program. If you are a retailer and you have received an assessment, you can read more about how the Department calculates its RAP assessments, as well as frequently asked questions and other pertinent information, here.
The Role of Wholesalers
Sales tax has existed in Tennessee since 1947. Since that time, wholesalers have been required to keep records of their sales to retailers and make those records available to the Department to aid in the proper administration and collection of the tax. Through the years, the Department has routinely requested and received these records from wholesalers.
Although the types of records wholesalers provide the Department has changed very little, how the records are provided has changed with technology. RAP allows the Department to review sales records from wholesalers in a more efficient way: electronically, instead of in paper form. Wholesalers can read more about RAP electronic reporting here.