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Old 05-22-2022, 06:37 AM   #1
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Tennessee business tax

I am in the process of purchasing an RV from a dealer in Tennessee.
However note that I live out of state.
After negotiating for over a week the dealer is starting to pressure me for an end of month purchase.
And now, after all is figured out they are telling me there is a Tennessee business tax that I have to pay. Has anyone ever heard of this tax?
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Old 05-22-2022, 06:49 AM   #2
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This is a dealer fee, not a state fee.

Tennessee charges business an income tax of 6.5%.

If the dealer is making a $10,000 net profit off your deal, they owe $650 income tax.

By charging you a fee, they are adding additional income to their bottom line in order to offset future tax liability.

It is a negotiable item.
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Old 05-22-2022, 06:53 AM   #3
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Old 05-22-2022, 09:00 AM   #4
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As redbaron says, this is a state tax on the business income and thus part of their operating expense. They are adding a surcharge to your purchase to help them pay that tax, thus making it explicit that part of the purchase price is a tax imposed by the state. If you buy a product or service in Tennessee, you are going to pay that one way or the other, either buried in the selling price or added to the bottom line as a fee. They should have disclosed that (and any other fee or tax) as soon as you got down to a price on the sales contract.

Dealers love to advertise low selling prices and conveniently leave off charges they plan to include in the "out-the-door" bottom line. Examples include dealer prep fees, destination charges, title fees, etc. You can't actually buy the RV without paying for all those things, regardless of whether you or the dealer are legally responsible for them.
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Old 05-23-2022, 12:26 PM   #5
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To my knowledge, the Tennessee "Business Tax" the dealer is adding on is simply an attempt to recover some of the business taxes the dealer is liable for to do business in the state. It is not a tax that the purchaser is liable to pay.

It more like the "documentation fees" a lot of dealers like to tack on to a contract. It's not something you are legally obligated to pay and is simply something negotiated into or out of an agreement to purchase. Getting stuck with it is up to you. I never pay the tax or a doc fee on a purchase. If they won't remove it I simply remove myself from their showroom.

I really take offence to fees and "taxes" added by a dealer after we have reached and agreement on price. It's not exactly a bait and switch but I react in the same manner I would to a last minute bait and switch scheme. Someday they'll start adding an "IRS income tax recovery fee". I won't pay that either.
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