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On July 1, the Metropolitan Government of Nashville and Davidson County (“Metro”) imposed a fee increase to the Central Business Improvement District (“CBID”) retailers on certain retail items and services that are subject to Tennessee sales tax. The fee has increased from 0.25% to 0.50%. The CBID fee is imposed on retailers in the district, the boundaries of which generally include the Cumberland River to the east, Lafayette Street to the south, Rosa L. Parks Blvd/8th Avenue to the west, and Dr. Martin Luther King Jr. Blvd to the north.
The tax will yield an increase of a quarter of a percent on the sales tax for some goods and services within the boundaries of the Downtown Central Business Improvement District (CBID).
Consumer prices on items such as restaurant food, clothing, and souvenirs will go from 9.25% to 9.50%.
It is important to note that while beer is subject to the new tax, wine and spirits are not. Taxes on alcohol will remain the same with the 15% liquor by the drink tax and 9.25% sales tax.
The new state law provides that the following goods and services are exempt from the fee:
Professional services;
Lodging provided to transients;
Tickets to sporting events or other live ticketed events;
Alcoholic beverages which are subject to the liquor by the drink tax in addition to sales tax;
Newspapers and other publications;
Overnight and long-term parking.
CBID retailers may, but are not required to, collect the fee from their customers by separately itemizing the fee on their customers’ invoices or receipts. Retailers should not include the fee in the sales price for sales tax purposes or in their taxable gross receipts for business tax purposes.
Special thanks to Janelle Beasley in our office for her assistance with this article.
Last modified: August 5, 2021
