REVENUE'S ENHANCED USE TAX COMPLIANCE EFFORTS PROVE
SUCCESSFUL

NASHVILLE, Tenn. - The Tennessee Department of Revenue's ongoing efforts to discover and collect unpaid use taxes have resulted in increased assessments and collections of use tax, particularly in the area of furniture purchased out of state by Tennessee residents. In calendar year 2005, the department assessed $779,086 in use tax related to furniture purchases and collected $746,491. In 2004, $659,511 was assessed and $636,924 collected compared to $229,661 assessed in 2003 and $203,925 collected that year.

"An effective tax system relies upon voluntary compliance," said Revenue Commissioner Loren L. Chumley. "The Department of Revenue's ongoing program to encourage Tennesseans to fulfill their use tax obligations is one of many ways the department encourages voluntary compliance among Tennessee taxpayers."

A common scenario occurs when a Tennessee resident purchases furniture from an out-of-state retailer. In a hypothetical example, a Tennessee resident purchases furniture totaling $40,000 from a furniture store in North Carolina. The furniture store does not add North Carolina sales tax to the customer's bill because the furniture is going to be delivered to the customer's home in Tennessee by a transportation company. In this instance, it is the Tennessee customer's responsibility to pay the $3,700 in Tennessee use tax upon receipt of the furniture.

What is use tax?
Use tax, the counterpart to the state's sales tax which has been on the law books since 1947, is the same rate as the sales tax. When someone buys merchandise outside of Tennessee, online or through a catalog and the seller of the merchandise does not collect sales tax, the consumer who bought the item has a legal obligation to file and pay use tax. Purchasing items outside of Tennessee, physically or electronically, does not exempt someone from paying use tax if an equal amount of sales tax was not paid to another state at the time of purchase.

File Use Tax Online
Use tax may be filed online via Revenue's Web site, www.Tennessee.gov/revenue. The statewide electronic commerce toll-free phone number is (866) 368-6374. Nashville-area and out-of-state callers should call (615) 253-0704.

Voluntary Compliance
Consumers are encouraged to come forward voluntarily to comply. Consumers with questions about use tax should call the Department of Revenue's Discovery Unit at (615) 532-6409.

The Department of Revenue collects approximately 92 percent of total state tax revenue. During the 2004-2005 fiscal year, the department collected $9.6 billion in state taxes and fees. In addition to collecting state taxes, $1.7 billion of local sales tax was collected by the department for local governments during the 2004-2005 fiscal year. Besides collecting taxes, the department enforces the revenue laws fairly and impartially in an effort to encourage voluntary taxpayer compliance. The department also apportions revenue collections for distribution to the various state funds and local units of government. To learn more about the department, log on to www.Tennessee.gov/revenue.

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