REVENUE'S ENHANCED USE TAX COMPLIANCE EFFORTS
PROVE SUCCESSFUL

NASHVILLE, Tenn. - Last January, the Tennessee Department of Revenue began contacting professional service firms as part of its ongoing efforts to discover and collect unpaid use taxes. The department sent letters to more than 3,200 dentists and doctors to request a review of their records for use tax liabilities. To date, these letters resulted in the department collecting more than $998,000 in use tax.

Professional service firms that did not respond to the department's initial letter will be contacted within the next month. Those that do not respond to this final request will then receive estimated assessments. Dentists and doctors were the first professional services groups to receive letters from the Department of Revenue. Other types of professional service firms will be contacted in the coming months.

"An effective tax system relies upon voluntary compliance," said Revenue Commissioner Loren L. Chumley. "The Department of Revenue's ongoing program to remind professional service firms of their use tax obligations is one of many ways the department encourages voluntary compliance among Tennessee taxpayers."

When a professional service firm purchases equipment or supplies used in conducting their business from out-of-state retailers without the payment of tax, use tax is due on the cost of the equipment or supplies. Use tax, the counterpart to the state's sales tax which has been on the law books since 1947, is the same rate as the sales tax. When someone buys merchandise outside of Tennessee, online or through a catalog and the seller of the merchandise does not collect sales tax, the consumer who bought the item has a legal obligation to file and pay use tax. Purchasing items outside of Tennessee, physically or electronically, does not exempt someone from paying use tax if an equal amount of sales tax was not paid to another state at the time of purchase.

Use tax can be filed online via Revenue's Web site, www.Tennessee.gov/revenue. The statewide electronic commerce toll-free phone number is (866) 368-6374. Nashville-area and out-of-state callers should call (615) 253-0704.

The Department of Revenue collects approximately 92 percent of total state tax revenue. During the 2004-2005 fiscal year, the department collected $9.6 billion in state taxes and fees. In addition to collecting state taxes, $1.7 billion of local sales tax was collected by the department for local governments during the 2004-2005 fiscal year. Besides collecting taxes, the department enforces the revenue laws fairly and impartially in an effort to encourage voluntary taxpayer compliance. The department also apportions revenue collections for distribution to the various state funds and local units of government. To learn more about the department, log on to www.Tennessee.gov/revenue.

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