Gross Receipts Taxes

Overview

Gross Receipts taxes are imposed only on certain business activities.  Any receipts that are subject to the Gross Receipts tax are exempt from Business Tax.  Therefore, if you are subject to the Gross Receipts tax, you should report those sales on your gross receipts tax return, but exclude them from your business tax return.

Bottlers:  If you produce and sell bottled soft drinks in Tennessee or if you import or cause to be imported bottled soft drinks into Tennessee from outside the state, then you are required to register for and pay the bottlers tax.  Bottled soft drinks include all nonalcoholic beverages, except milk, fruit and vegetable juices, and cider, in any kind of container, whether carbonated or not.  

Utilities – Gas, Water, Electric:  If you furnish or distribute gas, water or electric current, whether to a dealer, consumer, municipality or other customer, you must pay the utilities privilege tax. This tax does not apply to any governmental agency of the United States or any city or other political subdivision of the state owning and operating gas companies, water companies or power plants.

Vending:  If you operate a qualifying vending machine, you have the option of paying gross receipts tax instead of sales tax on your sales.  A qualifying vending machine is one that:

• is operated for the benefit of a charitable nonprofit organization,
• dispenses merchandise with a market value of 25 cents or less, and
• is built so that only a fixed, predetermined price can be paid for the item dispensed by the machine (i.e., the machine must not be capable of making change or being adjusted to change the price). 

If you qualify for and opt to pay the vending gross receipts tax, you also must register each organization for which such machines are operated and obtain a machine decal for every machine operated.

Any vending machine that does not meet the above qualifications is subject to the full rate of state and appropriate local sales and use tax instead of the gross receipts tax.

Mixing Bar:  If you sell setups (including water, soft drinks, and ice) for mixed drinks or alcoholic beverages, then you are subject to the mixing bar tax.  Establishments subject to this tax do not sell mixed beverages, but allow patrons to bring their own alcoholic beverages into the establishments.

Setups sold by cafes, cafeterias, and restaurants where such sales are merely incidental to the principal business and where no bar, lounge, or separate facility is maintained for the purpose of serving or selling mixed drinks and/or setups for mixed drinks are exempt from the tax.