# Tennessee economic nexus threshold

Tennessee's economic nexus threshold is $100,000 in retail sales.

### Included transactions:

- Retail sales including exempt retail sales such as exempt food and clothing during tax holiday periods
- Only direct sales count; sales made through a marketplace facilitator do not count toward the remote seller's own threshold

### Excluded transactions:

- Wholesale and sales for resale are expressly excluded from the $100,000 threshold
- Sales made through a marketplace facilitator

## Affiliate nexus

Tennessee recognizes both affiliate nexus and click-through nexus as forms of [physical-presence nexus](https://www.tn.gov/revenue/taxes/sales-and-use-tax/out-of-state-dealers-marketplace-facilitators.html). Click-through nexus is established when an out-of-state dealer uses a Tennessee-based party, such as an affiliate marketer or website operator, to refer or route customers to the dealer in exchange for a commission or other consideration. Affiliate nexus is established when a Tennessee subsidiary or related entity [acts as an agent](https://www.tn.gov/revenue/taxes/sales-and-use-tax/out-of-state-dealers-marketplace-facilitators.html) of the out-of-state dealer or conducts activities in Tennessee on the business's behalf. A common example is a Tennessee retail store that processes returns for goods purchased from a related online seller.

## Physical nexus

Under [T.C.A. 67-6-101 et seq](https://www.tn.gov/content/dam/tn/revenue/documents/tax_manuals/july-2022/salesanduse_july2022.pdf) and Tennessee Rule 129, any of the following independently establish physical nexus in Tennessee: a store, office, warehouse, showroom, or any other place of business; employees, agents, or independent contractors soliciting sales; in-state promotional activities conducted by company personnel, including exhibiting at trade shows; company-owned trucks or contract carriers serving as delivery agents; inventory stored in a Tennessee third-party warehouse, including Amazon FBA facilities with no available safe harbor; and performing repair, installation, or assembly services in the state.

A specific rule applies to trade show participation. A seller whose only Tennessee presence consists of [attending or exhibiting at a trade show](https://www.tn.gov/content/dam/tn/revenue/documents/tax_manuals/july-2022/salesanduse_july2022.pdf) without making sales at the event retains remote seller status. Any sales made at the event, however, require sales tax collection. Separately, the presence of a Tennessee-based employee who is not involved in making sales does not independently trigger physical nexus.

## Trailing nexus

Tennessee has no formally codified trailing nexus policy. [Tennessee Rule 129](https://www.tn.gov/content/dam/tn/revenue/documents/tax_manuals/july-2022/salesanduse_july2022.pdf) explicitly prohibits the Department of Revenue from seeking back taxes for periods prior to the rule's enforcement date, establishing a clear prospective-only posture for the state's economic nexus framework.

### Economic Nexus Threshold:

$100,000 in retail sales only (wholesale excluded, no transaction count)

### Effective Date:

October 1, 2020 (current $100,000 threshold)

### Evaluation Period:

Rolling prior 12-month period (not a fixed calendar year). Register and collect by the first day of the third calendar month following the month the threshold was crossed.

### Previous Threshold Rules:

N/A

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