Online shoppers add $2 million to county's coffers

Oct. 10—Online shoppers have been boosting the county's sales tax collections, with more than $2 million pumped into Cumberland County since a change in state law in October 2020.

Whether driven by convenience, a need for greater selection or physical limitations, online shoppers have found they can do the shopping they need while still supporting their local community. The state now divvies up sales taxes based on delivery location.

Beverley Selby of Crossville turned to online shopping during the pandemic, but she's continued to rely on it in the past years, particularly as her mobility has declined.

"Getting into and around big stores is harder and harder to manage," she said. "The motorized carts are often in use, or not charged, or I've seen the contempt people show those driving them."

She's also found the selection online can be better than she can find locally given the challenges of supply chain disruptions.

"Online shopping comes in extremely useful. You just have to wait two more days," she said. "And, receiving a parcel feels like Christmas sometimes."

Once, online retailers without a physical presence in Tennessee were exempt from collecting sales tax. That changed in 2019, though the state only required businesses with $500,000 or more in annual sales to the state to pay the 7% state sales tax and the local option sales tax — 2.75% in Cumberland County.

State law changed Oct. 1, 2020. Out-of-state businesses and marketplace facilitators were required to collect and pay Tennessee sales tax if their annual sales exceeded $100,000.

The change also required marketplace facilitators — third-party platforms where sales are made on behalf of marketplace sellers — to report sales by delivery destination and collect sales tax based on the local tax rate. These platforms collect the tax for their sellers. Online businesses with sales outside of marketplace facilitator platform must also register and pay sales tax if their Tennessee sales exceed $100,000.

Since the new law took effect, Tennessee has collected $649 million in state sales tax, with local sales tax collections exceeding $235 million. Local collections ranged from $50,376 in Lake County to more than $18 million in Davidson County last year.

Cumberland County collected $835,742 in sales tax from online purchases from October 2020-June 2021, and $1.2 million in the 2021-'22 fiscal year.

Online sales tax collections have coincided with some record sales tax figures. Last year Cumberland County collected $13.7 million, about $1.3 million more than budget projections. The city of Crossville collected $10.7 million.

Local sales tax is split between a municipality and the county when the purchase occurs inside a city's corporate limits. Local tax revenue from sales outside of a municipality's boundaries go to the county.

Online sales tax collections go to the jurisdiction where packages are delivered.

The county uses the bulk of its sales tax collections to fund the Cumberland County school system.

The upcoming budget projects a 12% increase in sales tax with additional budgeted increases for new retail operations at Buc-ee's and Chick-Fil-A, which opened this past summer. The county budgeted $15.6 million in sales tax in the current fiscal year to meet its education funding obligation. A portion of the property tax, 13.1 cents, will supplement the sales tax funding for schools.

Cumberland County reported $1.3 million in sales tax collections in August and September 2022.

These figures represent retail activity two months before, with September representing July sales. The collections exceeded budget projections by $23,287 in August and $103,474 in September.

Heather Mullinix is editor of the Crossville Chronicle. She covers schools and education in Cumberland County. She may be reached at hmullinix@crossville-chronicle.com.