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Avalara Help Center

Support: TN Marketplace Faciliator Rules

Due to new marketplace facilitator rules in TN, rentals through online platform websites that exceed 100k (ie., Airbnb, Vrbo/HomeAway/Evolve/booking.com/Trip Advisor, etc.) are now required to remit state sales, hotel occupancy, and local nightly tax (when applicable) straight to the TN DOR.

This new law increases the obligations that were previously required back in 10/1/2020 – as the 10/1/2020 date was requiring for marketplace facilitators to collect/pay the state and county sales tax to the TN DOR.

When is this starting?

All new reservations made/booked/reserved after January 1, 2021  

        How is this different than before?

        Previously, based on where the booking was reserved through, the homeowner was responsible for the following taxes:

·         TN state sales – paid through the TN DOR

o   Airbnb voluntary collected and paid this already as a default setting for their homeowners

o   Vrbo/HomeAway collect and pay this now for bookings made after 10/1/2020

·         TN county sales – paid through the TN DOR

o   Airbnb voluntary collected and paid this already as a default setting for their homeowners

o   Vrbo/HomeAway collect and pay this now for bookings made after 10/1/2020

·         Local city/county occupancy tax – paid through the respective county/city jurisdiction

·         Local city nightly tax – paid through the respective municipality or jurisdiction

·         Local gross receipts tax – paid through respective municipality or jurisdiction

o   Gatlinburg TN

o   Pigeon Forge TN

With the new rule change, the homeowner’s obligations to file/pay are drastically reduced. Essentially, the homeowner would no longer need the sales tax accounts or hotel occupancy tax accounts for their STR if all their future bookings are 100% done through a marketplace facilitator.

Note that this is for all bookings made AFTER 1/1/2021; meaning that any reservations originally booked in 2020 but the guest check-ins or check-outs would still be applicable for the tax and the homeowner is responsible for these reservations.

The new rule change still requires for the homeowner to still have proper business licensure. Therefore, the homeowner is required to maintain an active TN annual business tax account + any applicable city/county business licenses. This new rule change does not impact the homeowner’s obligation to collect/pay gross receipts tax in TN – therefore, if they have a rental in Pigeon Forge or Gatlinburg, they are still required to pay this tax and we will have this tax percentage available for them to report starting with January 2021 reports in February 2021.

In addition, the homeowner still should report their earnings so that our system can charge the TN Annual business tax return that is due at the end of each fiscal year. They can report this each month or they can choose to report at year end.

Can the homeowner not report each month and not pay the TN annual business tax or operate without a business license? Essentially, can the homeowner quit our service and choose not to report revenue/stay in compliance with having a business license?

This option is always available for the customer to take, but Avalara MLT strongly takes the stance of indicating that it is in the best interest of the homeowner to stay in compliance and to continue to report income into our system if they wish to remain a client and have our service file the necessary returns and renew their necessary licenses.

If they choose to cancel their accounts, then follow through with normal cancellation protocol and have a cancellation form filled out and submitted to mylodgtaxcancel@avalara.com

If a customer feels as though $20.00 pricing per month for a reduced number of returns due is necessary, please seek assistance from a supervisor to determine a new pricing structure for our system to charge per month. Historically, we have considered reducing costs to $10.00 for those with quarterly filing and $5.00 for annual filing only.  

Action Steps to talk about with the customer

1.       Confirm for the customer that they will handle the state sales + county occupancy tax in TN (this includes county nightly tax) if the bookings go through a qualified marketplace facilitator (Airbnb, Vrbo, Evolve, booking.com, Trip Advisor, ie., any company that makes more than 100k of gross sales in TN)

2.       Customers who have bookings directly or any bookings to where they were told that they were responsible for the state sales/occupancy/nightly tax should be reported as before into our system

3.       Customers are still responsible for any local gross receipts tax returns (primarily for those in Gatlinburg and Pigeon Forge), TN annual business tax filings, and renewing their licenses

4.       Explain to customers that this will be for reservations made after January 1, 2021 and this new rate will show on their account when they report January income in February.

a.       If the homeowner still requires for a reduced county rate (due to the fact that the booking was made in NOV 2020, but they’re staying in MAR 2021), then we can create a duplicate line item for them to report. Make the request in the MLT support inbox (if warranted) and an individual will create this if you need assistance.

5.       If they choose to cancel their accounts, then follow through with normal cancellation protocol and have a cancellation form filled out and submitted to mylodgtaxcancel@avalara.com

 

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