Amends TCA Title 67; Chapter 72 of the Public Acts of 2011; Chapter 193 of the Public Acts of 2017; Chapter 273 of the Public Acts of 2015; Chapter 452 of the Public Acts of 2017; Chapter 480 of the Public Acts of 2013; Chapter 530 of the Public Acts of 2009 and Chapter 602 of the Public Acts of 2007.

ON APRIL 30, 2019, THE HOUSE ADOPTED AMENDMENT #1 AND PASSED HOUSE BILL 326, AS AMENDED.<br /> <br /> AMENDMENT #1 rewrites this bill and revises present law provisions governing sales and use tax in regard to out-of-state dealers, as follows:<br /> <br /> (1) Under present law, dealers with no location in this state may choose to pay, in lieu of the tax otherwise authorized by the Local Option Revenue Act, local tax at the rate of 2.25 percent of the sales price on all sales made in this state. Proceeds from the tax are distributed to the counties according to a ratio and requirements detailed in present law. This amendment deletes these provisions.<br /> <br /> (2) Present law sets out the distribution of local sales and use tax review, under which:<br /> (A) 50 percent of the proceeds must be expended and distributed in the same manner as the county property tax for school purposes is expended and distributed; and<br /> (B) 50 percent is distributed as follows: collections for privileges exercised in unincorporated areas, to such fund or funds of the county as the governing body of the county directs; and collections for privileges exercised in incorporated cities and towns, to the city or town in which the privilege is exercised. However, a county and city or town may by contract provide for other distribution of the one-half not allocated to school purposes.<br /> <br /> This amendment adds that any out-of-state dealer making sales to a customer within this state must report to the department information as prescribed by the commissioner, and as required under this amendment (described below in (3)) that is sufficient for the commissioner to appropriately distribute revenue pursuant to (A) and (B). <br /> <br /> (3) This amendment requires out-of-state dealers, when reporting the local sales and use tax, to provide sufficient information as prescribed by the commissioner to indicate the incorporated municipality or unincorporated area of a county into which the sale is shipped or delivered, even if the local tax rates of the municipality and unincorporated area of the county are the same. If a dealer fails to provide the department with the information required under this item (3) and the department is unable to determine the proper distribution of local sales tax as described above in (2), then the department will distribute the local sales tax as follows: <br /> (A) For taxes received by the department before July 1, 2021, the tax will be distributed to the counties based on the ratio of local tax collections in the county over total local tax collections in all counties. The amount received by the county under this provision will be distributed first as described above in (2)(A). The remainder will be distributed to each incorporated municipality in the county based on the ratio of local tax collections in the municipality to total local tax collections in the county and will be distributed to the county based on the ratio of local tax collections in the unincorporated portions of the county to total local tax collections in the county; and<br /> (B) For taxes received by the department on or after July 1, 2021, the tax will be distributed to the counties based on the ratio of local tax collections in the county from dealers with no location in this state that can be identified by situs over the total local tax collections in all counties from dealers with no location in this state that can be identified by situs. The amount received by the county under this provision will be distributed first as described above in (2)(A). The remainder will be distributed to each incorporated municipality in the county based on the ratio of local tax collections in the municipality from dealers with no location in this state that can be identified by situs over the total local tax collections in the county from dealers with no location in this state that can be identified by situs and will be distributed to the county based on the ratio of local tax collections in the unincorporated portions of the county from dealers with no location in this state that can be identified by situs over the total local tax collections in the county from dealers with no location in this state that can be identified by situs.<br /> <br /> Similar to present law, under the provisions added by this amendment a county and a municipality may, by contract, provide for an alternative distribution for the amount not distributed under (2)(A).<br /> <br /> (4) This amendment adds to provisions of the streamlined sales and use tax sourcing provisions scheduled to take effect July 1, 2021, that when a product is sold from a location in this state and the purchaser instructs the seller to ship or deliver the product to another location within this state, the sale will be sourced to the seller's location.<br /> <br /> This bill as amended will take effect October 1, 2019.<br /> <br />