Tennessee

A foreign corporation (except for insurance companies) and foreign limited liability companies, may not transact business in Tennessee until it obtains a certificate of authority from the secretary of state. The following activities do not constitute transacting business:

1) Maintaining, defending, or settling any proceeding, claim, or dispute;
2) Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
3) Maintaining bank accounts;
4) Maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or appointing and maintaining trustees or depositories with respect to those securities;
5) Selling through independent contractors;
6) Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
7) Creating or acquiring indebtedness, deeds of trusts, mortgages, and security interests in real or personal property;
8) Securing or collecting debts or enforcing mortgages, deeds of trust, and security interests in property securing the debts;
9) Owning, without more, real or personal property; provided, that for a reasonable time the management and rental of real property acquired in connection with enforcing a mortgage or deed of trust shall also not be considered transacting business if the owner is attempting to liquidate the owner’s investment and if no office or other agency therefor, other than an independent agency, is maintained in this state;
10) Conducting an isolated transaction that is completed within one (1) month and that is not one in the course of repeated transactions of a like nature; or
11) Transacting business in interstate commerce.

Tennessee has a nexus standard in place that predated Wayfair and still remains today. Specifically, in addition to “doing business,” an entity must have substantial nexus in the state to be subject to tax. The term “substantial nexus in this state” was enacted in 2015 by the Revenue Modernization Act of 2015 (“RMA”) and includes, but is not limited to:

• Being domiciled in Tennessee
• Owning or using the company’s capital in Tennessee
• Having systematic and continuous business activity in Tennessee that has produced gross receipts attributable to customers in Tennessee
• licensing intangible property for use by another party in this state and derives income from that use of intangible property in this state;
• Having a “bright-line presence”. A person has bright-line presence in Tennessee for a tax period if
• The taxpayer’s total receipts during the tax period, exceed the lesser of $500,000 or 25% of the taxpayer’s total receipts everywhere during the tax period;
• The average value of the taxpayer’s real and tangible personal property owned or rented and used in Tennessee during the tax period exceeds the lesser of $50,000 or 25% of the average value of all the taxpayer’s total real and tangible personal property;
• The total amount paid in Tennessee during the tax period by the taxpayer for compensation exceeds the lesser of $50,000 or 25% of the total compensation paid by the taxpayer.