Tennessee Sales Tax Exemption Eligibility Based on Entity Classification: Recent Ruling Explained

• Tennessee ruling addresses how state’s unique application of federal entity classification rules impacts business’ eligibility for sales tax exemptions
• Understanding impact of state entity classification rules important for nexus determinations, exemptions qualification, and reporting non-income taxes
• Aprio’s State and Local Tax (SALT) team can assist with compliance and minimizing multi-state tax liabilities
• LLCs treated as separate business entities for state sales and use tax purposes, regardless of federal income tax treatment
• Recent Tennessee letter ruling addressed taxpayer’s eligibility for industrial machinery exemption under sales and use tax rules
• Taxpayer formed as wholly-owned LLC, electing to be treated as a corporation for federal income tax purposes
• Parent company transferring machinery, equipment, and personnel to Taxpayer for fabrication business
• Taxpayer will only fabricate goods for resale and use off premises, with majority of sales coming from sale of fabricated goods to Parent and third parties

Source: aprio.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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