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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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…
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…
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…
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…
Were mortgage origination fees and brokerage commissions earned by Tennessee joint ventures exempt from business tax as loan-broker services?
Yes. The joint ventures arranged residential mortgage loans for other lenders, fitting SIC Industry 6163 loan-broker services and the business-tax exclusion for persons engaged in extending credit.
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…
When a corporation's lease requires only a flat lump-sum rent payment, with the landlord separately responsible for utilities, taxes, maintenance, and repairs, can the corporation deduct anything from that rent when computing the value of rented property for Tennessee franchise tax purposes?
No. Because the lease only requires a flat $120,000 annual rent payment with no additional lessee-paid charges of any kind, the full $120,000 is the taxpayer's "net annual rent" for franchise tax…
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…
When a corporation indirectly owns an interest in a Tennessee-nexus limited partnership through a chain of tiered limited partnerships, does its share of that partnership's income get taxed twice for Tennessee excise tax purposes — once at the partnership level and again when it flows up to the corporation?
No double taxation. Income that has already been subjected to Tennessee excise tax in the hands of a Tennessee-nexus lower-tier partnership must be subtracted from the parent corporation's federal…
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…
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…
When a parent company's foreign-possessions subsidiary uses the federal Profit Split Method to allocate income from intangibles, how do the parent's resulting receipts get sourced in Tennessee's excise tax apportionment formula?
The Taxpayer's Profit Split Method income splits into two separately-sourced pieces for Tennessee's excise tax receipts factor. The half of the subsidiary's product-sales income assigned to the…
Did one Tennessee-based employee give an out-of-state online company enough nexus to require sales and use tax collection under the law applied in 2005?
Yes under the 2005 law analyzed. The employee working from Tennessee created physical presence even though the employee maintained a subsidiary's website, did not solicit sales, and could work…
Did a hospital owe Tennessee business tax on durable medical equipment rented to patients after discharge, even though its medical services were excluded?
Yes. Medical services were the hospital's dominant activity and were excluded from business tax, but leasing durable medical equipment was a separate taxable activity. Rental receipts were taxable…
Were pots, garden furniture, topsoil, gloves, seeds, fertilizer, and other non-plant items sold by a Tennessee nurseryman exempt from sales tax?
Mostly no. The nursery-products exemption did not cover pots, furniture, gloves, and other ordinary accessories. Separate law exempted qualifying seeds, fertilizer, pesticides, and containers sold…
Did store refrigeration installations become real property, and were their installation and warranty charges subject to Tennessee sales tax?
The walk-in coolers and freezers became real property, so the contractor paid tax on materials and their warranty charges were not taxable. Display cases remained tangible personal property, so…
Did Tennessee sales tax apply when a retailer subcontracted the fabrication and installation of custom countertops in customers' homes?
The custom countertops became fixtures. The retailer was liable for sales or use tax on fabrication and installation materials unless tax had already been paid, but it should not collect tax from…
Would a qualified subchapter S subsidiary be a separate Tennessee franchise and excise taxpayer even though federal law disregarded it?
Yes. Tennessee treated the QSSS as a separate franchise and excise taxpayer and required a pro-forma federal return. The parent was not taxable solely because it owned the subsidiary and did not…
Did installed MRI, CT, vascular X-ray, radiographic, and nuclear-medicine equipment become real property for Tennessee sales and use tax?
No. Despite their size, specialized rooms, wiring, shielding, and foundations, the imaging systems remained tangible personal property because removal and reuse were economically feasible and a…
Could a carpet supplier accept resale certificates for side-marked or tagged carpet purchased by contractor-dealers?
Sometimes. A supplier could accept a resale certificate when tagged carpet was strictly for resale and not delivered to a job site, but it needed added documentation. Tax was required when the…
When did a Tennessee structural-metal fabricator have to collect sales tax on fabricated products?
The fabricator had to collect tax when contractors picked up products in Tennessee or received them in Tennessee. Proper resale sales and qualifying common-carrier deliveries outside Tennessee were…
Were staffed truck-washing services exempt when performed on vehicles used in interstate commerce?
No. The interstate-commerce exemption for transferring qualifying trucks and trailers did not cover washing them. A staffed, non-coin-operated truck wash provided a taxable cleaning service, not an…
When did a Tennessee fabricator have to collect sales tax on fabricated pipe and related freight charges?
Tennessee sales tax applied when the customer received the fabricated product in Tennessee, including customer-furnished material, but not when delivery and transfer occurred outside Tennessee.…
When could a service provider deduct payments to subcontractors from its Tennessee business-tax base?
Only when the payment was for a service specifically listed in the contractor deduction and the taxpayer had included receipts from that same service in its tax base. The subcontractor's own…
Could an LLC with nonprofit ownership avoid Tennessee franchise and excise tax when every member accepted general-partner-level liability?
Yes. The LLC could be exempt if every member accepted full general-partner-level liability, timely filed the required documents, and no for-profit corporation owned it directly or indirectly. Its…
Which educational materials qualified for Tennessee's school-book sales-tax exemption?
Only printed textbooks for student use qualified as school books. Teacher editions, guides, answer keys, maps, globes, software, tapes, DVDs, and other teaching aids did not qualify under that exemption.
Were guarantors' payments after a manufacturer's equipment-lease default subject to Tennessee sales tax?
Not for the Tennessee industrial machinery, because the underlying lease was exempt. Guarantee payments tied to other equipment were taxable if that equipment had been delivered to the lessee in Tennessee.
Did an automobile auction's larger Tennessee facility qualify as warehousing and distribution for the franchise-and-excise job tax credit?
No. The business operated an automobile auction, not a warehousing-and-distribution enterprise. Storing consigned vehicles until auction was incidental to selling them and did not make the facility…
How did Tennessee tax home warranties, service-call fees, and repair parts for tangible personal property versus real property?
Warranties and service-call fees for tangible personal property were taxable, while those for real property were not. A separately priced mixed contract taxed only its tangible-property portion; an…
Which medical-record processing fees were taxable for hardcopy or electronic delivery, and did the printing equipment qualify as industrial machinery?
Hardcopy record charges generally were taxable as part of a tangible-property sale, while electronic transmission, viewing, tracking, and storage services were not. Printing equipment qualified only…
Did ready-to-eat food qualify for Tennessee's reduced food-tax rate after the retailer heated or combined it before sale?
No. Because the retailer further heated or combined the ready-to-eat food before sale, the food was prepared food taxed at the full 7% state rate plus local tax under 2004 law.
When were temporary-staffing fees retail sales, wholesale sales, or exempt from Tennessee business tax?
Most staffing fees were retail sales. Labor directly used to manufacture or process goods for resale was wholesale, and a fee was exempt only when it was separately traceable to an employee…
Were otherwise taxable medical equipment and supplies exempt because an individual's purchase or lease was reimbursed through TennCare Medicaid?
No. The equipment and supplies were sold or leased to individuals, managed-care organizations, or providers—not directly to Tennessee. TennCare reimbursement or assignment of benefits did not change…
Where did a Tennessee manufacturer source drop-shipment sales in its franchise-and-excise receipts factor when affiliates briefly took title at its dock?
The receipts followed the ultimate delivery destination. Sales shipped to an affiliate's out-of-state customer were excluded from the Tennessee numerator, while sales shipped to the affiliate's…
Were information-technology services sold to private clients and Tennessee state or local governments wholesale sales for business-tax purposes?
No. All the IT service sales were retail sales because the customers consumed the services rather than reselling them. The special wholesale rule for sales to Tennessee governments applied only to…
How did Tennessee tax store supplies bought under resale certificates, held in a Tennessee warehouse, and later used or resold in-state and out-of-state?
A resale certificate could be used while the retailer did not know which supplies it would consume or resell. Supplies used in Tennessee and sales to affiliates in Tennessee were taxable. Interstate…
Which hotel cancellation charges were subject to Tennessee sales tax: room and banquet cancellation fees, forfeited deposits, or early-departure fees?
Room-block and banquet cancellation fees were not taxable because no room, food, or beverage was furnished. Forfeited room deposits and early-departure fees were taxable because the ruling treated…
Did copy machines operated by a commercial reprographic center qualify for Tennessee's industrial-machinery sales-tax exemption?
Yes. The taxpayer's staff used the machines to fabricate copies and provide binding, stapling, and numbering services. That was the business of printing, so the copiers—and qualifying component…
Was a convenience-copier arrangement a taxable equipment rental when customers exclusively operated and controlled the machines?
It was a taxable rental. Customers had exclusive access, operated the copiers, selected their functions, and paid a base charge plus per-copy overages. Because the provider furnished no operator or…
Were electronically delivered digital identification certificates taxable as computer software or taxable services in Tennessee?
No. The Digital IDs identified users but did not direct the customer's computer to perform functions, so they were not computer software. Their sale also was not a transfer of tangible personal…
Would a single-member LLC and its Section 501(c)(2) holding-company owner owe Tennessee franchise and excise taxes after a public pension fund's acquisition?
No on the stated facts. The LLC remained federally disregarded and, because its sole member was a corporation, was also disregarded for Tennessee franchise and excise tax. Its Section 501(c)(2)…
Was a monthly fee for remotely accessing software on the provider's servers subject to Tennessee sales and use tax?
No. Monthly fees for remotely accessing software were not taxable because the software stayed on the provider's servers, customers received no title or possession, and the service was not…
Were packaging, shipping boxes, labels, and printed materials used for free sample packages exempt from Tennessee tax?
No. Bags and boxes for free samples did not qualify for the resale-packaging exemption, and all packaging, shipping supplies, labels, and printed materials used in Tennessee assembly were taxable…
Was a buying group's annual membership fee for access to supplier discounts subject to Tennessee sales tax?
No. The fixed annual fee bought an intangible right to purchase from program suppliers at negotiated discounts. It was not tied to a specific sale and was not a taxable service, admission, or…
Was a separately billed test of a permanently installed building sprinkler system subject to Tennessee sales tax?
No. The separately billed testing was not a specifically taxable service, and the installed sprinkler system was part of the real property rather than tangible personal property.
Could a Tennessee vending-machine operator include sales tax in the total amount customers deposited?
Yes. The operator could set one tax-included amount for the customer to deposit and back out the sales price and tax, but it had to clearly indicate that the displayed price included sales tax.
Did routing vehicle sale and purchase payments through an I.R.C. § 1031 intermediary change Tennessee sales-tax treatment?
No. Routing funds through a qualified intermediary did not change the underlying Tennessee sales-tax result. Lessee buyouts remained taxable, dealer resale sales remained exempt with certificates,…
Which process equipment qualified for Tennessee's industrial-machinery exemption, and which building parts did not?
Most listed process equipment qualified as industrial machinery because it was necessary and used primarily in manufacturing. Actual walls, roof-supporting frames, and any alignment framing that…
Did Tennessee tax tobacco products withdrawn from Tennessee inventory and sent to out-of-state retailers?
No under the stated facts. Tennessee tobacco tax did not apply to sales to retailers outside Tennessee, and merely withdrawing products from Tennessee inventory for distribution in another state was…
Who owed Tennessee sales or use tax on hospital cafeteria food and patient meals under a food-service contract?
Cafeteria sales to customers were taxable. Patient-food sales were also taxable unless the hospital gave a valid exemption certificate. The hospital needed its own use records, and the food-service…
Did a mail-order retailer owe Tennessee use tax on catalogs mailed to Tennessee residents from another state?
Yes. The retailer, as distributor, owed Tennessee use tax on the full cost price of catalogs distributed to Tennessee residents. The commercial printer or mailer was not the distributor responsible…
What Tennessee sales or use tax applied when a manufacturer and distributor withdrew inventory for free promotional use?
Manufactured giveaways used outside Tennessee were taxable on actual component-material cost, while Tennessee-use giveaways were taxed on fair market value, not below materials plus direct labor and…
Where did Tennessee source royalties from licensing manufacturing patents and know-how for the receipts-factor apportionment formula?
Royalties were sourced to Tennessee when a taxpayer doing business in the state licensed patents, know-how, or other intellectual property to a Tennessee person and payment was based on the…
Which Tennessee taxes applied when an out-of-state company occasionally sold, installed, and maintained security systems in the state?
Franchise and excise, sales or use, and business taxes applied because employee installation and maintenance visits created Tennessee nexus. Sales-tax treatment depended on fixture status: systems…
Were goods shipped from Tennessee to out-of-state customers taxable when the contract passed title at the Tennessee facility?
Yes. The sales terms transferred title when the goods left the seller's Tennessee facility. Because Tennessee treated a transfer of either title or possession in the state for consideration as a…
Which vendor charges for software modification, programming, integration, consulting, design, testing, and training were taxable in Tennessee?
Software modification and programming performed in Tennessee were taxable sales of tangible personal property. Consulting, design, testing, and training were nontaxable standing alone but taxable…
Did an SBA-backed limited partnership qualify for Tennessee's venture-capital-fund franchise and excise tax exemption?
Yes. The limited partnership operated exclusively to buy, hold, and sell securities of primarily nonpublic companies for its own account, and more than half of its capital came from the SBA, which…
Did an entire manufacturing process unit, including its specially designed enclosure, qualify as exempt industrial machinery?
Only partly. The machinery and equipment inside the manufacturing unit qualified as industrial machinery, but the enclosure did not. Even though the enclosure was necessary for drying, product…
When did a Tennessee site qualify as a manufacturer, and which packaging-line equipment qualified as industrial machinery?
If traditional manufacturing produced most of the location's revenue, the site qualified as a manufacturer and machinery installing blister packaging that accompanied the retail product was exempt.…
Was a spark-detection and fire-extinguishing system exempt as pollution-control equipment or industrial machinery?
No. The vendor did not show that pollution-control law required the system, and the equipment's primary function was preventing fires and explosions—not manufacturing products, controlling air or…
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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.