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Comptroller investigators found $36.6M in retail tax underpayments over 11 years

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(The Center Square) – Tennessee’s Retail Accountability Program to ensure retailers are paying the state the proper amount of taxes has led to $36.6 million in additional taxes collected over the past 11 years.

The program compares wholesaler and retailer numbers to tax reports sent in by businesses to make sure tax payments are correct.

The program was created in 2012 checking the sale of beer and tobacco and leading to $11.6 million in extra collections that year, according to a new report from the Tennessee Comptroller.

It was expanded to non-alcoholic beverages, soft drinks, candy and non-perishable foods in 2015.

The program was extended to 2025 by the General Assembly in 2022 legislation that requires a comptroller report on the effectiveness of the program by Nov. 1.

Tennessee relies heavily on sales tax to fund state government. Sales, alcohol and tobacco taxes were 65% of the total taxes collected at $14.3 billion in the 2022-23 fiscal year.

The Retail Accountability Program compares retailer and wholesaler sale reports for companies that sell $500,000 or more annually of the products and compare those numbers to Department of Revenue filings. It then notifies retailers who are potentially non-compliant and audits those retailers.

If an infraction is found, the retailer is fined. The retailer must pay the taxes due and 10% additional for the first three infractions then a 100% fine on taxes due from the fourth infraction and beyond.

Wholesalers are fined between $250 and $2,500 each month for not filing sales reports or filing incorrect sales reports.