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 digital auction platform a 'marketplace facilitator' that must collect Tennessee sales tax on auctions run by its customers?
No. A company that only provides the auction software and hosting and never collects or transmits payment is not a 'marketplace facilitator' under Tennessee law, so it does not have to collect or remi…
Which med-spa treatments, products, and memberships are subject to Tennessee sales and use tax?
It splits three ways. Prescription drugs for human use are exempt: IV nutrition therapy, injectable neurotoxins (Botox), dermal fillers, the chemical solution in medium-to-deep skin peels, and hyperba…
If a Tennessee lessor delivers leased trucks in Tennessee but they are used only out of state, must it charge Tennessee sales tax on every monthly lease payment?
Mostly no—only the first payment. When a Tennessee lessor delivers leased vehicles in Tennessee but the lessee drives them out and uses them only out of state, Tennessee taxes the first lease payment;…
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…
Are the computers, software, and related equipment a Tennessee manufacturer uses to run its production lines exempt from sales tax as industrial machinery?
Mostly yes for the systems that actually run the production lines. For a manufacturer, the computer hardware and software used to monitor and control production — line-optimization (MLO) and quality/s…
Which quality-assurance testing machines and supplies used by a Tennessee food manufacturer qualify for the industrial machinery exemption?
It depends on when the testing happens. For a manufacturer, equipment and supplies used to test the product during manufacturing are exempt: in-process testing equipment (metal detectors, fat analyzer…
Is the equipment and supplies a Tennessee manufacturer uses to treat its incoming process water and its wastewater exempt from sales tax as pollution control facilities?
It depends on which side of the process the item is on. For a manufacturer, the equipment that treats the wastewater the plant discharges — equalization tanks, pumps, circulators, feed pumps, instrume…
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…
Which freezing-plant machinery, equipment, and supplies qualify for Tennessee's industrial machinery exemption for a frozen-food manufacturer?
Mostly yes. For a frozen-food manufacturer, Tennessee's industrial machinery exemption covers the freezing system (freezers, compressors, evaporators, refrigerant/ammonia, chillers, piping/controls/va…
Does a Tennessee private dining club have to charge sales tax on the membership dues and initiation fees it collects?
Yes. Dues and initiation fees paid to a members-only private dining club are subject to Tennessee sales tax. Because the club offers live entertainment, games, and activities, admission to that entert…
When a sign company makes and bolts an illuminated storefront sign to a building, is the sale and installation subject to Tennessee sales tax, or does the sign become real property?
No — the sign does not become real property. The Department ruled that an illuminated channel-letter sign bolted to a storefront remains tangible personal property, so the sign company's charge to mak…
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…
Can a contractor expanding a municipal water-treatment plant buy the treatment piping exempt from Tennessee sales and use tax as industrial machinery?
Yes — the process piping is exempt. A municipal water utility that draws river water and treats it into drinking water sold to customers is a 'manufacturer' for Tennessee tax purposes (water is tangib…
Are repair services performed in Tennessee on equipment that is then shipped to an out-of-state customer subject to Tennessee sales tax?
It changed on July 1, 2024. Before then, repairing tangible personal property in Tennessee was a taxable service even if the repaired item was shipped back to an out-of-state customer, and the shippin…
Are streetlights, photocells, smart nodes, and poles a contractor installs for a public power authority subject to Tennessee sales and use tax?
No — they're exempt. When a contractor buys and installs streetlights, photocells, smart nodes, and poles as part of an electric distribution system owned or operated by a Tennessee government body (a…
Does a company that sells automotive window information labels to car dealers have to charge Tennessee sales tax on them?
No — the labels are exempt. A company that sells auto-window information labels (warranty, fuel-economy, and similar vehicle data) to car dealers does not have to charge Tennessee sales tax on them. T…
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…
Do a city's contractors owe Tennessee use tax on the equipment and materials they buy to build a municipal wastewater pilot-treatment plant and reclaimed-water pump station?
No. The Department ruled that the materials and equipment a Tennessee city's contractors buy to build a wastewater pilot-treatment facility and a reclaimed-water booster pump station are exempt from T…
Are membership fees for streaming live and on-demand fitness classes subject to Tennessee sales tax?
Yes. Membership fees for streaming fitness classes are subject to Tennessee sales and use tax. The pre-recorded, on-demand classes are taxable 'specified digital products' (digital audio-visual works,…
Are a contract manufacturer's fees and products for clinical-trial drugs subject to Tennessee sales tax, and does its equipment qualify for the manufacturing and R&D exemptions?
Mostly exempt. The Department ruled that the drugs a contract manufacturer makes for FDA-authorized clinical trials are exempt from Tennessee sales and use tax as prescription drugs for human use, bec…
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 a direct-selling company runs a party plan with hostess discounts and advisor award certificates, is Tennessee sales tax charged on the full price or only on the discounted price actually paid?
Genuine discounts reduce the taxable amount, but a separate fee paid to unlock a discount you must use right away is itself taxable. For a direct-selling company's party plan: (1) when a Hostess buys …
Are the membership dues and related fees (photo-ID activation, guest passes, towel/locker/equipment rentals, facility rentals) charged by a qualifying sports and fitness center exempt from Tennessee sales tax?
Yes. A sports and fitness center that meets the five statutory tests in Tenn. Code Ann. Section 67-6-330(a)(17) has its membership dues -- which would otherwise be taxed as recreation-club/health-spa …
Does Tennessee sales and use tax apply to a carrier's DSL Internet-access sales to end users, its Layer 2 data-link sales to non-ISP customers with their own point of presence, and the telecommunications services it buys to build its own DSL network?
Mixed. DSL Internet access sold directly to end users is exempt under the federal Internet Tax Freedom Act; Layer 2 data-link transmission service sold to a non-Internet-service-provider that owns its…
When a software vendor separately invoices each of three $25,000 software packages plus a maintenance agreement covering all three, does Tennessee's $1,600 single-article cap apply once per package or once to the whole sale, and does the maintenance agreement get the same cap?
Because each $25,000 software package is separately itemized on the invoice, the $1,600 local-option cap and the $1,600-$3,200 state single article tax apply separately to EACH package (not once to th…
Is an automated, interactive after-hours telephone answering service that routes calls, takes messages, and pages physicians a taxable telecommunications or ancillary service in Tennessee?
No. Even though the answering system transmits voice and data over telephone lines, the true object of the service is answering and routing calls (not transmitting communications), so it doesn't quali…
Is a bundled weight-loss program that includes an on-site fitness center, personal training, meal-plan coaching, and a motivational newsletter subject to Tennessee sales tax as health club dues?
Yes, mostly taxable. The weight-loss program is taxed as recreation club dues/fees because it bundles fitness-center access with coaching and services all delivered on-site, but the first $150 per mem…
Is the sale and installation of an above-ground swimming pool subject to Tennessee sales and use tax, or does it count as a non-taxable improvement to real property?
Yes, taxable. Because the above-ground pool is designed to be removable without serious damage to the property and keeps its character as personal property after removal, it's treated as tangible pers…
Are open-topped, returnable plastic crates that food producers rent to ship packaged food products to distributors and stores exempt from Tennessee sales and use tax as packaging materials?
No, taxable. Because the lidless, open-topped crates don't fully enclose the food products (that's done by an inner plastic bag) and delivery of the food isn't impracticable without the specific crate…
When a software company bundles its core product with optional add-on components and charges one non-itemized price, does the $1,600 local-option and $3,200 state single-article sales tax cap apply to each component, or to the whole bundle?
The single article cap does not apply. Because the taxpayer negotiates and invoices one lump-sum price for its core software plus optional components without itemizing each product separately, the ent…
Does an out-of-state company that licenses billing software to wireless carriers, and also provides billing services and arranges third-party printing/mailing, owe Tennessee sales and use tax on any of its fees?
Only partly. The one-time software licensing fee is taxable as a lease of prewritten software, but the monthly billing-service fees and the printing/mailing reimbursements are not taxable because the …
Which items on a medical-equipment company's product list — diabetic supplies, wheelchairs, braces, oxygen equipment, wound care supplies, and more — are exempt from Tennessee sales and use tax, and does a prescription, rental (vs. sale), or payment method change the answer?
It depends on the specific item: Tennessee exempts prosthetic devices and oxygen delivery equipment with no prescription needed, exempts durable medical equipment and mobility-enhancing equipment only…
When a Tennessee motor vehicle dealer separately bills a customer the $5.50 statutory fee for a temporary tag, does the dealer owe Tennessee sales tax or business tax on that charge?
No to both. The $5.50 temporary-tag fee, when separately stated on the customer's invoice and passed through dollar-for-dollar to the state, is treated as payment for the intangible right to operate t…
Is a monthly application-service-provider (ASP/SaaS) hosting fee, and its bundled add-on services like database setup, installation, bank reconciliation, and training, subject to Tennessee sales tax — and does the taxpayer owe use tax on the software licenses and hosting services it buys to run the ASP business?
The monthly ASP fee and related standalone services (database setup, bank reconciliation, training) are not subject to Tennessee sales tax as long as they're billed separately, but on-site installatio…
For a vacation/overnight rental property manager, which of its various charges — cleaning fees, forfeited deposits, reservation fees, pet deposits, resold show tickets, pass-through firewood charges, bundled wedding packages, and trip insurance — are subject to Tennessee sales tax?
Most are taxable: forfeited deposits, reservation fees, non-refundable pet deposits, resold show tickets, and pass-through item charges (like firewood) are all subject to sales tax, as is any bundled …
For a company that runs on-site photocopy and fax centers under a management-fee contract, which equipment and supplies qualify for the industrial machinery sales tax exemption, and must sales tax be charged on the full contract price?
Partly exempt. Pre-press, press, binding, and stapling machinery used in the copying process can qualify for the industrial machinery exemption (with Commissioner approval), and paper and copier compo…
Which industrial and medical gases sold by a specialty gas distributor — oxygen, acetylene, nitrogen, argon, propane, and mixtures used in welding — are exempt from Tennessee's local sales and use tax as "natural or artificial gas"?
It depends on whether the gas is used as combustible energy fuel: oxygen, acetylene, nitrogen (when used as fuel), and propane used to power equipment are exempt from local sales and use tax, but iner…
Is access to an online business-data platform — where customers build contact lists, send communications, review keyword impressions, and generate reports — subject to Tennessee sales and use tax?
No. Access to the database, including compiling contact lists, sending communications, reviewing keyword-impression data, and generating printed or electronic reports, is a non-taxable information ser…
Is a drug-eluting coronary stent system — a permanent artery-support implant coated with a restenosis-preventing drug, sold pre-mounted on a disposable delivery system — exempt from Tennessee sales and use tax as a prosthetic device?
Yes. The stent augments the coronary artery's function by holding it open so blood can flow to the heart, qualifying it as an exempt prosthetic device, and because the disposable delivery system is us…
When a government-owned gas utility district sells, installs, and services gas-fired appliances (furnaces, water heaters, ranges, grills, etc.) for customers, which of those transactions are subject to Tennessee sales tax, and does the utility's own government tax exemption cover any of it?
Split result. The utility's own government tax exemption only covers items it installs that become part of the customer's real property — everything it sells that stays tangible personal property afte…
Are platinum coils used to seal off brain aneurysms — sold pre-loaded on a disposable delivery wire for one price — exempt from Tennessee sales and use tax as prosthetic devices?
Yes. The platinum coil augments the function of the affected blood vessel by sealing off the aneurysm and promoting clotting and connective-tissue growth to prevent rupture, qualifying it as an exempt…
Are enteral feeding pumps, their disposable supplies (tubing, syringes, connectors), and the enteral nutrition food used with them all exempt from Tennessee sales and use tax?
Split result. Enteral feeding pumps and their disposable supplies (containers, tubing, needles, syringes, connectors) are exempt as prosthetic devices because they substitute for the mouth and esophag…
Are ureteral catheters — used to inject contrast dye and guide instrumentation during diagnostic ureteroscopy procedures — exempt from Tennessee sales and use tax as prosthetic devices?
No. Ureteral catheters and their guidewires are diagnostic tools that let urologists visualize the ureters from inside the body — they don't replace or augment any missing or reduced bodily function, …
Are specially manufactured farrowing crates — used to house sows giving birth in hog confinement facilities — exempt from Tennessee sales and use tax as farm equipment, and does it matter whether they're sold assembled or disassembled?
Yes. Farrowing crates meet all four requirements for Tennessee's farm equipment exemption — used directly and principally to produce pigs for off-premises sale, and priced over $250 as a single articl…
For an IT consulting firm whose employees sometimes telecommute across state lines, which computer services (development, design, installation, maintenance, consulting, training, documentation) are subject to Tennessee sales tax, and does it matter where the employee is physically sitting versus where the client's server is located?
Software development, programming, design, installation, and maintenance are taxable, based on where the client's server is located (not where the employee physically works from) — an out-of-state emp…
Are the reusable wooden patterns a metal casting foundry uses to make sand molds exempt from Tennessee sales and use tax as industrial machinery, even though the patterns never directly touch the finished metal casting?
Yes. Even though the wooden patterns never directly touch the molten metal or finished casting, they are "necessary to and primarily for" fabricating the product — an impossible-to-skip step in making…
Is a publisher's weekly newsprint publication exempt from Tennessee sales and use tax, and is its separate free annual publication also exempt?
Split result. The weekly publication is exempt from Tennessee sales and use tax because it's printed entirely on newsprint and distributed at least every 14 days, but the annual publication is taxable…
Is a permanently implanted Vena Cava Filter — sold as one unit price with its disposable introducer system, sheath/dilator, and guide wire — exempt from Tennessee sales and use tax as a prosthetic device?
Yes. The Vena Cava Filter augments the pulmonary veins' function by trapping blood clots and keeping the veins open, qualifying it as an exempt prosthetic device, and because the disposable introducer…
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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.