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 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…
Are on-hold telephone messaging, digital video-signage programming, and overhead music services subject to Tennessee sales tax, and does the provider owe use tax on the equipment it hands customers for free?
They're taxable. The Department ruled (in an advisory, non-binding revenue ruling) that a provider's On-Hold Messaging, VideoCast (digital video-signage) Programming, and Overhead Music services are a…
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…
A company tracks visitors to its customers' websites and apps and gives them analytics reports through a dashboard. Is that data-analytics service subject to Tennessee sales and use tax, even though it relies on software the customers access?
No — the data-analytics service is not taxable. The company collects data about the users of its customers' websites and apps (via tracking code the customer installs or data the customer sends), anal…
A company imports printed gift cards into a Tennessee warehouse and ships them to restaurants and retailers across the country. Does it owe Tennessee sales or use tax on the cards, and can it buy them tax-free for resale?
It depends on where the cards end up. The company imports printed gift cards from an out-of-state vendor, stores them in a third-party Tennessee warehouse, and ships them to its restaurants and retail…
A 501(c)(3) nonprofit runs an on-demand vehicle-share program in a Tennessee city. Are its membership fees, single-use rental fees, and penalty fees exempt from sales tax because it's a nonprofit — or are they taxable?
All of the fees are taxable. A 501(c)(3) nonprofit runs an on-demand shared-vehicle program (vehicles parked in city hubs, rented for 60-minute periods). The Department ruled: (1) the Membership Fees …
If a company installs energy-saving equipment it owns in a customer's building and bills only a monthly share of the energy saved, is that 'pay-from-your-savings' arrangement subject to Tennessee sales and use tax?
Yes. The company's agreements to furnish and remotely monitor energy-saving power equipment are subject to Tennessee sales and use tax as a lease of tangible personal property (§ 67-6-204). The compan…
A company sells subscriptions to a library of pre-recorded online training videos, with discussion boards and other features included. Is a monthly or annual subscription to these pre-recorded courses subject to Tennessee sales tax?
Yes. The company's monthly and annual subscriptions to its library of pre-recorded online training courses ARE subject to Tennessee sales and use tax — but under a different rule than live or interact…
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 sells an annual subscription to its cloud-based employee-scheduling platform, which customers access remotely. Is that subscription subject to Tennessee sales and use tax?
Yes — the subscription is taxable because the true object is remotely accessed software. The company develops and hosts a cloud-based employee-scheduling platform (the 'Interface') and sells customers…
A Tennessee company licenses speech-recognition software to run a transcription service and charges its clients a fee per report. Are the fees it charges clients taxable, and is the software the company itself buys taxable or exempt as a purchase for resale?
Two different answers. (1) The report fees the company charges its CLIENTS are NOT subject to Tennessee sales tax — the true object is a nontaxable transcription and storage service, and the small 'cl…
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 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 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 Tennessee firm rents out IT contract workers by the hour for software projects — business analysts, systems analysts, programmers, QA testers, database administrators, project managers. Which of those hours must it charge Tennessee sales tax on?
It depends on the role. The firm rents out IT staff by the hour, and Tennessee taxes the hours of its Programmers and Database Administrators — because their work is the creation or programming of sof…
A Tennessee firm resells ERP software and separately offers optional consulting services — training, configuration, project management, data conversion, documentation, testing, and report writing. Which of those services must it charge Tennessee sales tax on?
Mostly no. Of the firm's optional consulting services, only Report Writing is taxable on its own — and only when it includes software coding or programming that isn't merely incidental, which makes it…
A Tennessee retailer sells trail mixes, glucose tablets, electrolyte drinks, non-alcoholic beer, coupon books, hearing aid batteries, and propane. Which are taxed at the lower 5% food rate, which at the full 7% rate, and which are exempt?
It depends on the item. Most of the retailer's edible products — non-alcoholic cocktail mixes and beer, all three trail mixes, fiber drink mix, food thickener, all the oral electrolyte solutions/powde…
Is a Tennessee technology consultant's work taxable — setting up a temporary 'virtual lab' to test software, and backing up a customer's data — when no software is sold to the customer?
No, none of these are taxable. A Tennessee technology-consulting firm sets up new software and hardware for customers, and the Department ruled that three parts of its work are NOT subject to Tennesse…
Are remote-desktop and IT-support web services taxable in Tennessee the same way online meeting and training/webinar platforms are?
It splits along a clean line: services that let someone view/control a SINGLE computer remotely aren't taxable, but services that LINK MULTIPLE PEOPLE in an audio/video session ARE. The Department rul…
Is a call-tracking service — toll-free numbers that route and record sales calls so a retailer can measure its advertising and capture customer data — taxable in Tennessee as a telecommunications service?
No. The Department ruled that 'Call Tracking Services' are NOT subject to Tennessee sales and use tax. The provider sells retailers a package built around custom toll-free 'vanity' numbers (supplied t…
Are software 'configuration' consulting services -- setting toggles and building tables within already-installed software, without writing new code -- taxable in Tennessee, and can a vendor bill them tax-free separately from software development work?
No, software configuration services are NOT subject to Tennessee sales and use tax, as long as the consultants only set predefined toggles/switches and build tables within existing software -- without…
Is the sale of customized shop drawings used by contractors to fabricate items taxable in Tennessee, and does it matter whether they're delivered as a printed booklet versus purely electronically?
It depends entirely on the delivery medium. The Department ruled that the Taxpayer's customized shop drawings are subject to Tennessee sales and use tax when transferred to the customer in a TANGIBLE …
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…
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 …
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…
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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.