By Eric Tresh and Liz Cha

On April 10, 2017, a Tennessee Chancery Court ordered that the Tennessee Department of Revenue is temporarily prohibited from enforcing a regulation that requires out-of-state retailers making annual sales in excess of $500,000 to collect and remit sales tax. The Order arises out of a dispute between the Plaintiffs and the Department of Revenue regarding the Constitutionality of the regulation. The regulation, which became effective January 1, required out-of-state retailers to register with the Department of Revenue by March 1 and to begin collecting state sales taxes after July 1. The Department of Revenue and Plaintiffs, American Catalog Mailers Association and NetChoice jointly requested the court’s order to limit uncertainty in the marketplace while the case is pending. The Court’s order also provides that retailers who may be subject to the regulation may voluntarily comply with the regulation during the pendency of the litigation. Am. Catalog Mailers Ass’n v. Tenn. Dep’t of Revenue, Tenn. Ch. Ct., No. 17-307-IV (complaint filed Mar. 30, 2017).