For the past half-decade, Tennessee has operated a “Retail Accountability Program” (RAP) aimed at sniffing out tax cheats on beer and tobacco sales. In short, RAP requires wholesalers to document their sale of booze and cigs to the state Department of Revenue. This helps ensure that the retailers who buy from those wholesalers pay the proper sales tax to the state.
But last year, the General Assembly tweaked the law, allowing Revenue to expand RAP’s data grab to numerous other products “from time to time.” With such broad authority, it’s no surprise that Revenue subsequently expanded RAP to all kinds of products, not just beer and tobacco, including items like candy and soft drinks, among others.
Retailers and wholesalers have legitimate beef with this change in the law. First, it requires tons of paperwork to track every item from purchase from a wholesaler to sale to a customer. This leads to higher costs for retailers, which ultimately are passed on to the consumer. And if items spoil or expire and are tossed, or are donated to a nonprofit, retailers might still have to pay sales tax on that under RAP, even if those items are never actually sold. Finally, the role of tracking and assessing taxes belongs to the government, not businesses themselves. This law forces businesses to do the government’s job. It places additional red tape on retailers and turns wholesalers into unpaid tax auditors.
You might not hear much about this change in the law, but you can bet it’s a huge pain for your local grocery store or gas station, and eventually for your wallet. Let’s hope lawmakers will set the Department of Revenue straight on whose job it is to track sales taxes.