Tennessee eFairness

  Following notice and comment rulemaking, in October 2016, Tennessee's Department of Revenue promulgated rule 129. The rule requires out-of-state dealers with more than $500,000 worth of annual sales to the state's residents to collect and remit all Tennessee sales taxes.   The rule took effect on January 1, 2017 with remote sellers required to comply beginning on July 1, 2017.  The American Catalog Mailers Association and NetChoice filed a complaint challenging the rule in March 2017 on the grounds that the Department of Revenue failed to follow proper administrative procedures in promulgating the rule. 

Pursuant to usual Tennessee administrative proceedings, the Tennessee legislature considered the rule in April 2017; the legislature modified the rule to suspend enforcement of the collection and remittance requirement. The chancery court subsequently entered an order in April 2017 preventing enforcement of the rule. 

On June 30, 2017, the State moved to compel the associations to respond to the State's discovery requests.  On July 28, 2017, the Chancery Court of Tennessee heard oral argument on the state's motion to compel discovery from the two trade association defendants.  In a bench ruling that will be further defined in the order to be drafted by the parties, the judge agreed to allow some discovery, including the names of the trade association members and their contact information, in order to enable the state to conduct informal or formal discovery of the members.