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The Tennessee Department of Revenue (the "Department") has ruled that a provider of a digital auction platform is not a marketplace facilitator under Tennessee law because it does not collect the payment from the purchaser and transmit it to the marketplace seller. Accordingly, it is not required to collect and remit sales and use tax on sales made through its platform. <a href="https://www.tn.gov/content/dam/tn/revenue/documents/rulings/sales/26-04.pdf">Tenn. Rev. Ruling No. 26-04</a> (Dep’t of Rev., May 13, 2026).

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The Facts: Company provides its customers with a platform as well as an online hosting environment to enable its customers to manage and conduct auctions of real and tangible personal property. Each customer maintains full control over its auction events, including setting bidding terms, managing its customer eligibility, and choosing the form of payment.

While Company provides the digital environment necessary to conduct the auctions and to transmit bids electronically, it does not set prices, take title to any items or buy or list products for sale, participate in the underlying bidding activity between its customers and their customers, or finalize sales.

Company does not process payments, handle refunds or chargebacks, nor collect or remit taxes on behalf of its customers. It also does not monitor or manage payment disputes or enforce fulfillment.

The Sales and Use Tax: Like most sales and use taxes, the Tennessee tax is imposed on retail sales of tangible personal property and specifically enumerated services.

A marketplace facilitator is required to collect and remit tax on sales made through its marketplace if it made or facilitated sales to Tennessee consumers of more than $100,000 during the previous 12-month period. Tenn. Code Ann. § 67-6-501(f). A marketplace includes a platform where tangible personal property or services subject to tax are offered for sale. Tenn. Code Ann. § 67-6-102(55). A marketplace facilitator is a person who, for consideration, agrees to facilitate sales subject to tax through a physical or electronic marketplace, collects the payment from the purchaser, and transmits payment to the marketplace seller. Id. at 102(56)(A). Finally, a marketplace seller is a person who makes sales through a marketplace operated by a marketplace facilitator. Id. at 102(57).

The Ruling: The Department first concludes that Company’s platform is a marketplace since it offers for sale tangible personal property that is subject to sales and use tax. Then, analyzing all of the words in the statute, it determines that Company is not a marketplace facilitator since it does not receive or have access to funds related to the underlying financial transactions. Company’s customers use their own payment processors who collect payment and transmit payment back to them. While Company’s platform facilitates sales, it does not collect payments from its customers’ customers as required to meet the definition of a marketplace facilitator. Therefore, Company is not required to collect and remit Tennessee sales and use tax on sales made on its platform.

The Ruling is not binding on the Department and is limited to the particular facts and circumstances presented. Despite this, the Ruling serves as clear guidance from the Department regarding its interpretation of the scope of Tennessee’s marketplace facilitator laws.

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This update is one in a series of updates written for the&nbsp;<a href="https://www.blankrome.com/news-and-events/the-br-state-local-tax-spotlight-june-2026/">June 2026</a>&nbsp;edition of&nbsp;The BR State + Local Tax Spotlight.

© 2026 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.

Craig B. Fields

State + Local Tax

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Applying All of the Words in the Statute, Tennessee Department Rules that Provider of Digital Auction Platform Is Not Subject to Sales and Use Tax Collection Responsibilities

Applying All of the Words in the Statute, Tennessee Department Rules that Provider of Digital Auction Platform Is Not Subject to Sales and Use Tax Collection Responsibilities

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Applying All of the Words in the Statute, Tennessee Department Rules that Provider of Digital Auction Platform Is Not Subject to Sales and Use Tax Collection Responsibilities

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