- 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
- 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. 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 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 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 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 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.
