How Much is Sales Tax in Downtown Nashville?

Adams and Reese LLP

Adams and Reese LLP9.25%. 

But wait, the tax man has a little surprise.  Downtown Nashville businesses are also required to pay a 0.50% fee on most sales, in addition to sales taxes.

This means that downtown business owners pay an additional 50 cents for every $100 in sales.

All this talk about taxes has us cueing up The Who’s classic “Success Story”

Away for the weekend

I've gotta play some one-night stands

Six for the tax man, and one for the band

The fee is imposed on retailers in the Central Business Improvement District (CBID), an area generally bounded by the Cumberland River, Lafayette Street, Rosa L. Parks Boulevard and Dr. Martin Luther King, Jr. Boulevard. The fee is used for recruiting major conventions, cleanliness and security in the district.

The CBID fee is administered in the same manner as the state sales tax. However, the following are not subject to the CBID fee:

  • Sales exempt from TN state sales tax;
  • Hotel-motel lodging;
  • Newspapers and other publications;
  • Parking;
  • Professional services;
  • Sporting and live ticketed events; and
  • Wine, spirits and high gravity beer sold by the drink.

This means that the CBID fee must be paid on all those long-neck beers sold down on Lower Broad.  But not on frozen whiskey margaritas generously poured for visiting bachelorettes.

Of course, those frozen whiskey margaritas are instead taxed an additional 15% for the liquor-by-the-drink tax, imposed on the sale of wine, spirits and high gravity beer sold by the glass.

The Department of Revenue collects CBID funds and distributes them to Metro. Businesses must report CBID fees and pay them to the Revenue no later than the 20th of each month.  Revenue advises businesses to file a separate Schedule D on their sales and use tax returns.

If you want to charge customers for the extra 0.50%, you must separately itemize the CBID fee on the receipt.  Otherwise, the tax man says you have to eat the fee.  According to Revenue, you cannot simply increase sales tax to 9.75%, the fee must be separately itemized.

See this publication from Revenue for more information.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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