Tennessee State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Tennessee, with full citations and the original source on every page.
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Is a flat subscription fee for a mobile health-tracking app, bundled with a blood-pressure monitor and support, subject to Tennessee sales tax?
Yes — it's taxable. A flat annual subscription to a mobile heart-health program is subject to Tennessee sales tax because, applying the true-object test, what the customer is really buying is remotely…
Which parts of a healthcare practice-management software suite are subject to Tennessee sales tax, and what happens when they are bundled into one price?
It depends on the product. Tennessee taxes remotely accessed software, so the 'Manager' electronic-health-record product is taxable. But 'Billing and Claims' (a billing-and-collection service the vend…
Are the consulting, setup, and website fees a company charges to run an employee-rewards program taxable in Tennessee — and what about the transaction fees, merchandise, and gift cards?
Mostly not. The Department ruled that the consulting, startup, and website-design/configuration fees a company charges to set up and run an employee-recognition rewards program are NOT subject to Tenn…
When a company hires a team to implement and customize a new ERP system, which parts of the project — configuration, custom coding, training, support — are subject to Tennessee sales tax?
Only the custom coding. In a project to implement a new cloud ERP system, the Department ruled that the only taxable piece is the optional custom software development — writing new code or using devel…
Are self-paced online training courses, downloadable course textbooks, and live-instruction courses subject to Tennessee sales tax?
It depends on the format. The Department ruled that self-paced online courses — a real-estate licensing course and an exam-guide course delivered through the school's learning-management system — are …
Are the fees a staffing app charges to connect businesses with short-term workers and process their pay subject to Tennessee sales tax?
No. The Department ruled that the fees an online platform charges to match businesses with short-term workers (staff augmentation) and to process the workers' pay are NOT subject to Tennessee sales an…
Are subscription compliance-monitoring services that match a customer's data against a proprietary database taxable in Tennessee, or are they nontaxable information and data processing services?
Not taxable. The Department ruled that a data company's four compliance-monitoring offerings — which take a customer's uploaded employee or vendor data, continuously compare it against the company's p…
Is a subscription rental-property advertising platform and app a taxable software product or a nontaxable advertising service in Tennessee?
Taxable. The Department ruled that a subscription online platform and mobile app that helps property managers create and manage rental-property advertising listings is taxable computer software — not …
Does a delivery-app marketplace owe Tennessee sales tax on the fees it charges sellers and delivery drivers (as opposed to the sales it facilitates to shoppers)?
No. The Department ruled that the fees a delivery-app marketplace charges to its sellers and delivery drivers are not subject to Tennessee sales and use tax. The true object of those charges is non-ta…
When software is taxable remotely accessed software in Tennessee, are the separately stated implementation, onboarding, and content fees billed with it also taxable?
Taxable. When a company sells remotely accessed software that is taxable in Tennessee, the related implementation and content fees it bills along with the software are taxable too — even when they're …
Are subscription fees for an online freight-posting (advertising) platform and an aggregated freight-rate data service subject to Tennessee sales and use tax?
Not taxable. The Department ruled that neither part of this freight-matching platform is subject to Tennessee sales and use tax. The first offering is an online board where freight brokers post haulin…
Are web-based data analytics services — reports, dashboards, and analyst consulting — taxable in Tennessee, or a nontaxable service delivered through software?
Not taxable. The Department ruled that a company's web-based data analytics services — digital reports, an interactive analytics dashboard, and analyst consulting — are not subject to Tennessee sales …
Are online training courses subject to Tennessee sales tax — and does it matter whether the course is taught by a live instructor or is self-paced?
It depends on whether the course is live or self-paced. The Department ruled that the company's two live, instructor-led online course formats are NOT subject to Tennessee sales and use tax — the stud…
Does Tennessee sales tax apply to a subscription information-database service, its email alerts and data licenses, and a bundled system that includes physical equipment?
Mostly no, with one exception. The company runs a web-based subscription information database and sells several related services. The Department ruled that the core database subscription is NOT subjec…
Does an online event-ticketing platform owe Tennessee sales tax on the fees it charges, and who has to collect sales tax on the tickets — the platform or the event organizer?
Three things. First, the online event-ticketing company's own charges — its Service Package fees and its Payment Processing fees — are NOT subject to Tennessee sales tax. They pay for nontaxable event…
An online education company sells two kinds of courses: self-study online courses a student works through alone, and live webinars taught by an instructor in real time. Are these subject to Tennessee sales tax?
It depends on the format. (1) SELF-STUDY online courses ARE subject to Tennessee sales tax — the student works through the material by interacting with a computer program (reading text, answering know…
A company runs a cloud document-storage product and an optional add-on, both accessed through a web portal that is itself software. Are its charges subject to Tennessee sales and use tax, or is the real product a nontaxable data-storage service?
No. The company's charges for its cloud 'Basic Product' and optional 'Add-On Component' are NOT subject to Tennessee sales and use tax. Both run on the company's proprietary software, and the web-base…
A company buys software, hosts it on its own servers outside Tennessee, and has its Tennessee employees access it remotely to do their work and to support its affiliates. Are its software purchases or its affiliate support fees subject to Tennessee sales and use tax?
No to both questions. (1) The fees the company charges its Affiliates for support services are NOT taxable, because those services aren't specifically enumerated under Tennessee law — and it is the co…
A qualified data center processes customers' data using its own and third-party software, and also charges affiliated companies for remote access to that software. Are its data-processing service charges — and its software-access charges to affiliates — subject to Tennessee sales tax?
No to both. (1) The qualified data center's charges for the services it performs are NOT taxable — they are nontaxable information and data processing services, and the fact that the center uses softw…
A company delivers electronically generated products for its clients and gives them a web-based interface (with a layout-design tool) to manage orders and view reports. Are its 'Basic Package' charges subject to Tennessee sales tax when the whole service runs on the company's software?
No. The company's 'Basic Package' charges are NOT subject to Tennessee sales tax. The package runs on the company's software — including a web-based interface clients access from Tennessee — and softw…
A Tennessee company gives customers free web access to their account information, separately sells access to a rebranded third-party online platform, and uses remotely accessed software to run its own operations. Which of these are subject to Tennessee sales tax, and how does it handle software its employees use both inside and outside Tennessee?
It depends on which charge. (1) FREE website access the company bundles with its services is NOT taxable — the website is software, but its true object is the underlying nontaxable service, so the com…
A company uses software in three ways — licensed from foreign affiliates and hosted abroad, subscribed from third-party vendors and hosted out of state, and bought and installed on its own servers in and out of Tennessee. Which of those charges are subject to Tennessee sales and use tax?
It depends on where the software lives and where it's used. (1) Affiliate-hosted software — licensed from foreign affiliates and bundled with hosting, support, and backup for one price — is taxable on…
A company sells data-processing, storage, document, and payment services delivered through web portals, and also sells and buys remotely accessed software used by people in several states. Which of these charges are subject to Tennessee sales and use tax, and how is the multi-state software portion figured?
It depends on what's being sold. The company's six Service Offerings — information management, remote storage, electronic delivery, payment management, and two web-based information services — are all…
A company hosts proprietary software and offers it two ways: a subscription where the client logs in and uses the software, and an outsourcing package where the company does the work and the client rarely touches the software. Which charges are subject to Tennessee sales and use tax?
It depends on the package. The Subscription Package — where the client logs in and uses the company's hosted software itself — IS taxable as remotely accessed software (Tenn. Code Ann. § 67-6-231(a)(2…
A company pays third-party vendors for software the vendors build and host to convert and translate data between two incompatible records-management systems. The company and its clients never access or control that software. Are those charges subject to Tennessee sales and use tax?
No. The charges the company pays its records-management vendors are not subject to Tennessee sales and use tax, because the vendors are providing the nontaxable service of converting digital products.…
Does Tennessee charge sales tax on online-gaming purchases — downloaded games, codes for games you play on a remote server, and prepaid game, points, or subscription cards?
It depends on the product — downloads are taxable, pure remote access is not, and prepaid cards are taxed only when (and if) they are redeemed for something taxable. This retailer sells five kinds of …
Are an online vendor-referral website's charges -- for sales-lead referrals, used-product advertising space, phone-call tracking reports, and hosted vendor websites -- subject to Tennessee sales and use tax?
None of it is taxable. An online business runs a website where customers find vendors and submit purchase requests; it charges vendors for (1) new-product sales-lead referrals, (2) space to advertise …
For an online database and a long menu of related Internet services accessed remotely over the web, which charges are subject to Tennessee sales and use tax?
Most of it is NOT taxable -- only the items the customer actually receives as tangible personal property are. The company sells an online database (with software tools, reports, and photos) plus a lon…
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These are official tax letter rulings and advisory opinions issued by Tennessee's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.