--- oa_review_kit: v1 guide_slug: tn-sales-tax guide_version: tn-sales-tax@2026-05-22T08:04:12.671Z archetype: vat_gst --- # Review kit: TN Sales Tax Thank you for reviewing this Guide. This kit is one file with three parts: how to use it, an interview prompt for your AI, and the Guide itself. ## How to use this kit (3 steps, about 15 minutes) 1. Open the AI you already use (ChatGPT, Claude, Gemini, anything that reads markdown) and paste in everything from "INTERVIEW PROMPT" below, including the Guide at the end. 2. Your AI interviews you like a colleague, one question at a time. Just talk: war stories, walk-throughs, the mistakes you catch. No writing required. 3. Your AI writes your answers up as a single markdown file. Hand it back at openaccountants.com/skills/tn-sales-tax/handback (also linked from the Guide page: "Hand back your file"). What you added is published under your name and credential. If your AI cannot produce the exact output format, hand back whatever you have: a revised Guide file, a worksheet, or plain notes. We take those too, and a person reviews them by hand. The format below is the one we can apply straight away. --- # INTERVIEW PROMPT (paste from here down into your AI) You are interviewing a practising accountant about how they actually do the work covered by the attached Guide ("TN Sales Tax", slug `tn-sales-tax`). Interview them like a colleague doing a handover. Do not lecture. Ask ONE question at a time and wait for the answer. Chase war stories and specifics: what kind of client, which portal step, how big the penalty was. The rates, thresholds, and citations are our job; we refresh those from primary sources. Capture ONLY what is NOT derivable from law: - order of operations, and what a wrong order corrupts - what to ask a client before computing anything - what to assume when a fact is unknown, and how it gets flagged - the most-missed traps, with penalty size and who falls in - how the portal or filing channel actually behaves - what has to reconcile before anyone signs - when to refuse the work and hand it to a human specialist If the accountant corrects a rate, threshold, or deadline in the Guide along the way, record it in the FACT CORRECTIONS table, but do not steer the interview toward numbers. ## Questions to work through Ask these in order, one at a time. Skip any the accountant has already covered; follow up where a story has specifics worth pinning down. Each question is tagged with the method slot(s) it feeds. 1. [sequence] Walk me through the last VAT return you prepared, start to finish. What did you open first, and why that order? 2. [intake_questions] [evidence] A new client hands you nothing but a bank statement. What do you do before you'll classify a single line? 3. [pattern_library] Which bank-statement line gets misclassified most often in your experience? What does it look like and where should it actually go? 4. [scope_gate] Tell me about a client you refused or referred out. What about their VAT situation made you stop? 5. [trap] When you review a return someone else drafted, what mistake do you catch most often? 6. [conservative_default] When you can't tell if a sale is domestic or cross-border, what do you assume, and how do you mark it? 7. [cross_check] Before you sign, what has to reconcile with what, and how close is close enough? 8. [filing_mechanics] Walk me through filing on the actual portal. What surprises first-timers: the order of forms, what locks, what you can't undo? 9. [judgment_rule] Ever had a client on a simplified scheme where the "simplification" made things worse? How do you decide who belongs on it? 10. [trap] What's the real penalty story you tell clients, the one that actually happened? 11. [evidence] Which claims will you draft from a bank statement but never file without the underlying paper? 12. [unsettled_law] Anything in VAT right now you deliberately won't finalise because the rules are moving? ## Method slots (for tagging the write-up) - `scope_gate` (Scope gate and refusals): when to stop and send the client to a human - `sequence` (Order of operations): what order to do things in, and what a wrong order corrupts - `intake_questions` (Client intake questions): what to ask a client before computing - `evidence` (Documents and evidence): which documents to insist on, and what is draft-grade vs file-grade - `judgment_rule` (Judgment rules): how a practitioner actually picks when the law allows two routes - `conservative_default` (Conservative defaults): what to assume when a fact is unknowable at draft time - `trap` (Traps and most-missed items): the mistakes everyone makes, what they cost, and who falls in - `filing_mechanics` (Portal and filing mechanics): how submission actually works: channel, order, what locks - `cross_check` (Cross-checks before signing): what has to reconcile with what before delivery, and how close is close enough - `pattern_library` (Pattern library): how messy real-world data (bank lines, payout platforms) maps to tax categories - `edge_case` (Edge-case playbook): the client situations that change the method, not just the numbers - `unsettled_law` (Unsettled-law flags): what not to finalise right now, and why - `handback_protocol` (Hand-back protocol): what the finished working paper contains and who reviews it ## Output format: oa-handback v1 When the interview is done, write the answers up as ONE markdown file in exactly this shape. Fill in the reviewer's real name, credential, and email (ask for them at the end if they have not come up). Every method block gets a `### [method:]` heading where `` is one of the 13 slot ids above. Keep `guide_slug` and `guide_version` exactly as given. Omit any section the interview produced nothing for, but keep the headings that remain exactly as shown. The `fact_key` column may be left blank when unknown. ```markdown --- oa_handback: v1 guide_slug: tn-sales-tax guide_version: tn-sales-tax@2026-05-22T08:04:12.671Z reviewer_name: reviewer_credential: # free text: CPA, EA, ACCA, Steuerberater... reviewer_email: verdict: --- ## METHOD ### [method:filing_mechanics] ### [method:intake_questions] - - ... ## FACT CORRECTIONS | fact_key | current | correct | source | |---|---|---|---| | | | | | ## FLAGS - [unsettled] - [refer] ## NOTES ``` If for any reason you cannot produce this exact format, output the accountant's corrections and methods as clear plain notes instead. The hand-back page accepts plain notes and revised Guide files too; this format is an optimization, never a gate. --- # THE GUIDE UNDER REVIEW --- name: tn-sales-tax description: "Use this skill whenever asked about Tennessee sales tax, Tennessee use tax, Tennessee sales tax nexus, Tennessee sales tax returns, Tennessee exemption certificates, taxability of goods or services in Tennessee, or any request involving Tennessee state-level consumption taxes. Trigger on phrases like \"Tennessee sales tax\", \"TN sales tax\", \"Tennessee use tax\", \"Tennessee nexus\", \"T.C.A. 67-6\", \"Tennessee DOR sales tax\", or any request involving Tennessee sales and use tax filing, classification, or compliance. NOTE: Tennessee has NO state income tax, making sales tax revenue critical. Tennessee has among the HIGHEST combined sales tax rates in the US (up to 9.75%). ALWAYS read the parent us-sales-tax skill first for federal context." jurisdiction: US-TN domain: vat-gst tax_year: 2025 --- # tn-sales-tax ## Skill Metadata **Skill Metadata** | Field | Value | | --- | --- | | Jurisdiction | Tennessee, United States | | Jurisdiction Code | US-TN | | Tax Type | Sales and Use Tax | | State Tax Rate | 7% (standard); 4% on grocery food | | Maximum Combined Rate | 9.75% (7% state + 2.75% max local) | | Primary Legal Framework | Tennessee Code Annotated (T.C.A.) Title 67, Chapter 6 | | Governing Body | Tennessee Department of Revenue (TNDOR) | | Filing Portal | TNTAP (Tennessee Taxpayer Access Point) -- https://tntap.tn.gov | | Economic Nexus Effective Date | October 1, 2019 | | SST Member | Yes (associate member) | | No State Income Tax | Yes -- Tennessee has NO state income tax (Hall Tax on investment income was repealed effective Jan 1, 2021) | | Contributor | Open Accounting Skills Registry | | Validated By | Pending -- requires US CPA or Enrolled Agent sign-off | | Validation Date | Pending | | Skill Version | 1.0 | | Confidence Coverage | Tier 1: rate lookups, basic nexus, standard taxability. Tier 2: single article cap, SaaS taxability, food rate distinctions. Tier 3: audit defense, penalty abatement, complex bundled transactions. | | Format | Restructured to Q1 execution format, April 2026 | ## Confidence Tier Definitions Every rule in this skill is tagged with a confidence tier: - **[T1] Tier 1 -- Deterministic.** Apply exactly as written. No reviewer judgement required. - **[T2] Tier 2 -- Reviewer Judgement Required.** Claude flags the issue and presents options. A licensed CPA, EA, or tax attorney must confirm before filing. - **[T3] Tier 3 -- Out of Scope / Escalate.** Do not guess. Escalate to a licensed tax professional. ## Step 0: Client Onboarding Questions Before proceeding with any Tennessee sales tax analysis, collect the following from the client: [T1] **If the client cannot answer questions 1-4, STOP and gather this information before proceeding.** [T1] **Client Onboarding Questions** | # | Question | Why It Matters | | --- | --- | --- | | 1 | Do you have a Tennessee sales tax registration / tax ID? | Determines whether registration is needed before filing. | | 2 | What is your current filing frequency (monthly / quarterly / annually)? | Controls which return periods to prepare. | | 3 | What is your nexus type -- physical presence, economic nexus, or both? | Determines registration obligations and applicable rules. | | 4 | Are you a marketplace seller (selling through Amazon, Etsy, etc.)? | Marketplace facilitator may already be collecting on your behalf. | | 5 | What types of products or services do you sell in Tennessee? | Drives taxability classification under Tennessee law. | | 6 | Do you sell to exempt entities (government, nonprofits, resellers)? | Determines whether exemption certificates must be collected and retained. | | 7 | Do you have locations, employees, or inventory in Tennessee? | Physical presence creates nexus independent of economic thresholds. | | 8 | Do you sell into multiple Tennessee local jurisdictions? | Local tax rates vary; determines compliance complexity. | ## Step 1: Tax Rate Structure ### 1.1 State Rate - **State sales tax rate** — 7% percent (retail sale of tangible personal property and certain services; one of the highest state-level sales tax rates in the US) _(T.C.A. Section 67-6-202)_ ### 1.2 Reduced Rate on Grocery Food - **Reduced rate on grocery food effective Jan 1, 2024** — State rate on food and food ingredients reduced to 4% effective January 1, 2024 (down from 5%); local taxes still apply to food _(T.C.A. Section 67-6-228)_ ### 1.3 Local Rates **Local Rates** | Tax Component | Rate Range | Authority | | --- | --- | --- | | State tax (general) | 7.0% | T.C.A. Section 67-6-202 | | State tax (grocery food) | 4.0% | T.C.A. Section 67-6-228 | | Local option tax (county) | 1.5% -- 2.75% | T.C.A. Section 67-6-702 | | **Maximum combined (general)** | **9.75%** | | | **Maximum combined (grocery)** | **6.75%** | | **Tennessee has among the highest combined sales tax rates in the United States.** Some jurisdictions reach the 9.75% maximum. [T1] ### 1.4 Single Article Cap on Local Tax [T1] - **Single article cap on local tax** — Tennessee caps the local sales tax on a single article (single item) at $1,600. Local tax applies only to the first $1,600 of the sales price of a single article. The state 7% tax applies to the full price (no cap). The cap applies per individual item, not per transaction. _(T.C.A. Section 67-6-702(a))_ **Example:** A $50,000 boat -- state tax: $50,000 x 7% = $3,500 (no cap). Local tax: $1,600 x 2.75% (max) = $44 (capped at local tax on $1,600 only). ### 1.5 Sourcing Rules [T1] - **Sourcing rules** — Tennessee is generally an origin-based sourcing state for intrastate sales. Intrastate over-the-counter: seller's location. Intrastate shipped: origin-based (seller's location). Interstate (remote sellers): destination-based. ## Step 2: Transaction Classification Rules ### 2.1 General Rule - **General taxability rule** — Tennessee sales tax applies to the retail sale of tangible personal property and certain enumerated services. _(T.C.A. Section 67-6-201)_ ### 2.2 Taxability Matrix **Taxability Matrix** | Item Category | Taxable? | Rate | Authority | Tier | | --- | --- | --- | --- | --- | | General tangible personal property | Yes | 7% state + local | T.C.A. Section 67-6-202 | [T1] | | Grocery food (food for home consumption) | Yes (reduced rate) | **4% state + local** | T.C.A. Section 67-6-228 | [T1] | | Prepared food (restaurant meals) | Yes | 7% state + local | T.C.A. Section 67-6-102(31)(F) | [T1] | | Clothing and footwear | Yes | Full rate | No exemption | [T1] | | Prescription drugs | Exempt | 0% | T.C.A. Section 67-6-314(a)(1) | [T1] | | Over-the-counter drugs | Yes | Full rate | Not exempt | [T1] | | Durable medical equipment | Exempt (certain items with prescription) | 0% | T.C.A. Section 67-6-314 | [T1] | | Motor vehicles | Yes | 7% state + local (single article cap on local) | T.C.A. Section 67-6-202 | [T1] | | Gasoline and motor fuel | Exempt from sales tax (motor fuel tax) | N/A | T.C.A. Section 67-6-329 | [T1] | | Utilities (residential electricity) | Yes | Full rate | T.C.A. Section 67-6-202 | [T1] | | Utilities (natural gas, residential) | Yes | Full rate | T.C.A. Section 67-6-202 | [T1] | | Industrial machinery (direct use in manufacturing) | Exempt | 0% | T.C.A. Section 67-6-206 | [T2] | | Agricultural equipment and supplies | Exempt | 0% | T.C.A. Section 67-6-207 | [T1] | | Software -- canned (tangible medium) | Yes | Full rate | T.C.A. Section 67-6-102(44) | [T1] | | Software -- canned (electronic delivery) | Yes | Full rate | T.C.A. Section 67-6-231 | [T1] | | Software -- custom | Yes | Full rate | T.C.A. Section 67-6-231 | [T2] | | SaaS (Software as a Service) | **Taxable** | Full rate | T.C.A. Section 67-6-231; TNDOR guidance | [T2] | | Digital goods (e-books, music, video) | Yes | Full rate | T.C.A. Section 67-6-231 | [T1] | | Data processing services | Not taxable | 0% | Not enumerated | [T2] | | Extended warranties/service contracts | Yes | Full rate | T.C.A. Section 67-6-102(44) | [T1] | ### 2.3 SaaS Taxability -- Tennessee Position [T2] - **SaaS taxability position** — Tennessee taxes SaaS and digital products broadly. Tennessee enacted specific legislation (effective July 1, 2015) taxing "specified digital products" and "software access services" (which includes SaaS). Specified digital products include digital audio works, digital audiovisual works, digital books, and any other electronically transferred product. Software access services (SaaS) are defined as the right to access and use software where the end user does not receive a copy. This is explicitly taxable. _(T.C.A. Section 67-6-231; T.C.A. Section 67-6-102(89))_ ### 2.4 Services Taxability [T2] **Services Taxability** | Service | Taxable? | Authority | | --- | --- | --- | | Repair and installation of TPP (labor + parts) | Yes | T.C.A. Section 67-6-102(44) | | Telecommunications | Yes | T.C.A. Section 67-6-102(44)(C) | | Cable/satellite TV | Yes | T.C.A. Section 67-6-226 | | Parking (commercial) | Yes | T.C.A. Section 67-6-212 | | Amusement and recreation | Yes (admissions) | T.C.A. Section 67-6-212 | | Hotel/lodging | Yes (plus local hotel/motel tax) | T.C.A. Section 67-6-202 | | Professional services (legal, accounting) | No | Not enumerated | | Personal services (haircuts, spa) | No | Not enumerated | | Construction/real property | No (materials taxable at purchase) | DOR guidance | | Transportation/freight (separately stated) | Not taxable | T.C.A. Section 67-6-102(44) | ## Step 3: Return Form Structure ### 3.1 Registration - **Registration requirement** — All sellers with nexus must register through TNTAP for a sales and use tax certificate of registration. No fee for registration. _(T.C.A. Section 67-6-601)_ ### 3.2 Filing Frequency **Filing Frequency** | Monthly Tax Liability | Filing Frequency | Due Date | | --- | --- | --- | | Over $400 per month | Monthly | 20th of the following month | | Under $400 per month | Quarterly | 20th of month following quarter-end | **Note:** TNDOR assigns frequency at registration. Annual filing is not generally available for sales tax. [T1] ### 3.3 Returns and Payment - **Returns and payment requirements** — Form SLS 450 (Sales and Use Tax Return) is filed through TNTAP. Electronic filing is required for all registrants. Payment is due on the same date as the return. Both state and local taxes are reported on the same return. ### 3.4 Vendor Discount - **Vendor discount for timely filing** — 2% of the first $2,500 of tax due per return period. Maximum discount: $50 per return period. Available only for timely filing and payment. _(T.C.A. Section 67-6-508)_ ### 3.5 Penalties and Interest **Penalties and Interest** | Violation | Penalty | Authority | | --- | --- | --- | | Late filing | 5% per month, up to 25% | T.C.A. Section 67-1-804 | | Late payment | Same as late filing | T.C.A. Section 67-1-804 | | Failure to file | Estimated assessment + penalties | T.C.A. Section 67-1-1501 | | Fraud | 50% of deficiency | T.C.A. Section 67-1-804 | | Interest | Statutory rate (currently ~7.25%) | T.C.A. Section 67-1-801 | ## Step 4: Deductibility / Exemptions ### 5.1 Tennessee Exemption Certificates **Tennessee Exemption Certificates** | Certificate | Use Case | Authority | | --- | --- | --- | | **Form ST-14** (Certificate of Resale) | Purchases for resale | TNDOR | | **Form F-13** (Sales Tax Exemption -- Industrial Machinery) | Manufacturing equipment | T.C.A. Section 67-6-206 | | **Form ST-18** (Agricultural Exemption Certificate) | Farm equipment and supplies | T.C.A. Section 67-6-207 | | **SSTCE** (Streamlined certificate) | Multi-state purchases | SST Agreement | | **Government exemption letter** | Government entity purchases | T.C.A. Section 67-6-320 | ### 5.2 Requirements [T1] - **Valid exemption certificate requirements** — Valid certificates must include purchaser information, Tennessee registration number (for resale), reason for exemption, description of goods, signature, and date. ### 5.3 Good Faith and Retention [T2] - **Good faith and retention rule** — Good faith acceptance protects sellers. Certificates must be retained for 3 years from the date of the last transaction. ### 6.1 When Use Tax Applies - **When use tax applies** — Tennessee use tax applies when sales tax was not collected on items used, stored, or consumed in Tennessee. ### 6.2 Use Tax Rate - **Use tax rate** — The use tax rate equals the sales tax rate: 7% state + applicable local. The single article cap applies to local use tax as well. ### 6.3 Use Tax Reporting - **Use tax reporting** — Businesses: Report on Form SLS 450. Individuals: Report on Tennessee Consumer Use Tax Return (or via optional reporting on any state filing). ## Step 5: Key Thresholds ### 4.1 Physical Nexus - **Physical nexus** — Standard physical nexus principles apply. ### 4.2 Economic Nexus [T1] Tennessee enacted economic nexus effective **October 1, 2019**. **Economic Nexus Thresholds** _(T.C.A. Section 67-6-524)_ | Threshold | Value | Measurement Period | | --- | --- | --- | | Revenue | **$100,000** in sales into Tennessee | Previous 12 months | | Transactions | N/A (revenue only) | | | Test | Revenue only | | ### 4.3 Marketplace Facilitator Rules [T1] - **Marketplace facilitator rules effective October 1, 2020** — Marketplace facilitators meeting the nexus threshold must collect and remit. Marketplace sellers relieved for facilitated sales. _(T.C.A. Section 67-6-102(24)(C))_ ## Step 6: Filing Deadlines and Penalties Refer to Step 3 for filing frequencies and due dates. [T1] ## PROHIBITIONS 1. **NEVER** advise that grocery food is exempt in Tennessee (it is taxable at a reduced 4% state rate + local). [T1] 2. **NEVER** advise that SaaS or digital goods are not taxable in Tennessee (both are explicitly taxable). [T1] 3. **NEVER** ignore the single article cap on local tax when calculating tax on items over $1,600. [T1] 4. **NEVER** use a transaction-count threshold for Tennessee economic nexus (revenue only, $100K). [T1] 5. **NEVER** state that Tennessee has a state income tax (it does not, since Jan 1, 2021). [T1] 6. **NEVER** apply the reduced food rate to prepared food or restaurant meals (those are taxed at the full 7% rate). [T1] 7. **NEVER** forget to apply local taxes in Tennessee -- local rates can add up to 2.75% to the state rate. [T1] 8. **NEVER** assume origin-based sourcing applies to remote/interstate sales (destination-based applies for remote sellers). [T1] 9. **NEVER** cap the state tax at $1,600 -- only the LOCAL tax has the single article cap. [T1] 10. **NEVER** advise that Tennessee offers a generous vendor discount -- the maximum is $50 per period. [T1] ## Edge Case Registry ### 7.1 Single Article Cap Application [T1] - **Single article cap application scenarios** — The single article cap on local tax ($1,600) creates interesting scenarios: High-value items: A $100,000 piece of equipment pays 7% state tax ($7,000) on the full price, but local tax only on $1,600 (e.g., at 2.75% = $44 local). Total: $7,044. Multiple items: Each item in a transaction is evaluated separately. A purchase of 10 items at $500 each: local tax applies to the full $500 per item (since each is under $1,600). Bundled items: If items are sold as a unit, the bundle is treated as one article. [T2] ### 7.2 No State Income Tax Impact [T1] - **No state income tax impact** — Tennessee has no state income tax (the Hall Tax on interest and dividends was fully repealed effective January 1, 2021). Sales tax is a critical revenue source for the state. Tennessee has less incentive to reduce sales tax rates. The high combined rate (up to 9.75%) partially compensates for no income tax. Businesses relocating to Tennessee for income tax savings must budget for higher sales tax costs. [T2] ### 7.3 Manufacturing Exemptions [T2] - **Manufacturing exemptions** — Tennessee provides a broad manufacturing exemption: Machinery used directly and primarily in manufacturing is exempt. [T2] Raw materials incorporated into finished products are exempt. [T1] The "directly and primarily" test requires that the machinery's primary purpose be manufacturing (51%+ of use). [T2] Energy fuel and water used in manufacturing are exempt. [T2] _(T.C.A. Section 67-6-206)_ ### 7.4 Sales Tax Holiday [T1] - **Sales tax holiday** — Tennessee holds an annual sales tax holiday (typically late July/early August): Clothing ($100 or less per item): exempt from state and local tax. School supplies ($100 or less per item): exempt. Computers ($1,500 or less): exempt. Specific dates and items vary annually -- verify with TNDOR each year. ### 7.5 Short-Term Rental Tax [T2] - **Short-term rental tax rules** — Short-term rentals (less than 90 consecutive days) are subject to: State sales tax (7%). Local sales tax. Additional state and local occupancy taxes. [T2] Marketplace facilitators (Airbnb, VRBO) collect and remit. ### 7.6 Amusement Tax / Admissions [T1] - **Amusement tax / admissions rules** — Admissions to amusement, sports, and entertainment events are taxable: State rate of 7% applies. Local rates apply. Nonprofit exempt events may be excluded with proper documentation. [T2] ### 7.7 Waste Collection Services [T2] - **Waste collection services taxability** — Tennessee taxes certain waste collection and disposal services: Commercial waste collection: taxable. [T2] Residential waste collection: may be exempt in some circumstances. [T2] ## Test Suite ### Test 1: Basic Rate Calculation [T1] **Question:** A retailer in Nashville (2.25% local) sells a $200 pair of shoes. What is the total sales tax? **Expected Answer:** State: $200 x 7% = $14.00. Local: $200 x 2.25% = $4.50. Total: $18.50. ### Test 2: Grocery Food Rate [T1] **Question:** A consumer buys $300 in groceries in Memphis (2.25% local). What tax is due? **Expected Answer:** State: $300 x 4% = $12.00. Local: $300 x 2.25% = $6.75. Total: $18.75. ### Test 3: Single Article Cap [T1] **Question:** A customer buys a $50,000 boat in a county with 2.75% local tax. What is the total sales tax? **Expected Answer:** State: $50,000 x 7% = $3,500 (no cap). Local: $1,600 x 2.75% = $44 (capped). Total: $3,544. ### Test 4: SaaS Taxability [T2] **Question:** A Tennessee business subscribes to a $500/month SaaS CRM tool. Is Tennessee sales tax due? **Expected Answer:** Yes. Tennessee explicitly taxes SaaS. At Nashville's rate: $500 x 9.25% = $46.25/month. ### Test 5: Economic Nexus [T1] **Question:** An out-of-state seller made $90,000 in sales and 400 transactions in Tennessee. Does the seller have nexus? **Expected Answer:** No. Tennessee's economic nexus is revenue-only at $100,000. The seller is below the threshold. Transaction count is not relevant. ### Test 6: No Income Tax Context [T1] **Question:** A company considering relocating from New York to Tennessee asks about the overall tax burden. What should be highlighted about sales tax? **Expected Answer:** Tennessee has no state income tax, but it has one of the highest combined sales tax rates (up to 9.75%). The 7% state rate is among the highest in the US. Businesses must factor in higher sales tax costs on purchases to offset income tax savings. ### Test 7: Sales Tax Holiday [T1] **Question:** During Tennessee's sales tax holiday, a customer buys a $90 shirt and a $120 pair of boots. Which qualify? **Expected Answer:** The $90 shirt qualifies ($100 or less) and is exempt. The $120 boots do NOT qualify (exceeds $100 threshold) and are fully taxable. ## Reviewer Escalation Protocol **Reviewer Escalation Protocol** | Trigger | Action | | --- | --- | | Any [T3] tagged item encountered | STOP. Do not guess. Escalate to licensed CPA, EA, or tax attorney. | | Client has audit notice or assessment | Escalate immediately. Do not advise on audit response. | | Multi-state nexus question involving 3+ states | Flag for senior reviewer with multi-state experience. | | Penalty abatement or voluntary disclosure | Escalate to licensed professional with state-specific experience. | | Ambiguous taxability of a product/service | Present both interpretations to reviewer with supporting authority. | ## Contribution Notes - This skill follows the Q1 execution format (Step 0 through Step 7). - All rules are tagged [T1], [T2], or [T3] per the Confidence Tier Definitions. - Rate tables are deterministic lookup tables -- no narrative explanation of rates. - To update this skill, submit a pull request with the specific section, supporting statutory authority, and effective date of the change. - All changes require validation by a US CPA or EA before merging. ## Disclaimer This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon. The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com). Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.