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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Which medical equipment and supplies purchased by an orthopedic clinic were exempt from Tennessee sales or use tax?
Orthopedic supports, prosthetics, implants, sutures, and prescription drugs were exempt. Ordinary pillows needed proof of primarily medical support use. Needles and syringes were exempt only for…
Which patient restraints, positioning aids, and support products qualified for Tennessee's orthotics sales-tax exemption?
Cervical pillows, eggcrate pads, and Kodel bed pads were exempt orthotics. Pelvic holders, diaper chairs, and vest restraints were exempt only when used for support rather than restraint. The other…
Could a Tennessee local government pass its gasoline and tire tax exemptions through when supplying those items to a private vehicle contractor?
No. The government's exemptions did not pass through to its private contractor. Tax-exempt gasoline could not be supplied for vehicles operated by the contractor's employees, and tax-exempt tires…
Which computer consulting and programming services did Tennessee treat as taxable, where did local tax apply, and did the single-article cap limit the charges?
Custom programming and software installation were taxable. The listed consulting services were generally nontaxable when separately sold, but design tied to the taxpayer's own programming sale was…
Were separately stated, at-cost travel and living reimbursements taxable when incurred in providing custom programming or taxable computer consulting?
Yes when the underlying sale was taxable. Travel and living reimbursements tied to custom programming—and to consulting that was part of a software or programming sale—entered the taxable sales…
How did Tennessee's local single-article sales-tax cap apply to notebook, prepackaged, and custom-built computer systems, and did the assembler qualify as a manufacturer?
A notebook itself could be one article, but bundled software, accessories, warranties, and separate computer components required their own allocated prices. Without allocations, the cap did not…
When did a variable corporate hotel-room block qualify for Tennessee's exemption for accommodations supplied to the same person for 90 continuous days?
The hotel collected tax during each room's first 90 continuous days, then could refund or credit tax only for the core number of rooms continuously occupied by the corporate customer. A cancellation…
Did a newly separated fabrication corporation qualify immediately as a Tennessee manufacturer, and were its FOB-destination shipments to out-of-state job sites taxable?
Yes. The separate fabrication corporation qualified as a manufacturer from its formation date under the stated 51% revenue assumption, subject to required authorizations. All five FOB-job-site…
Could a Tennessee financial institution apportion its franchise and excise taxes, and how were its factoring, loan, and service receipts sourced?
Yes. The institution used a single gross-receipts factor: all covered receipts entered the denominator, while the numerator depended on Tennessee delivery of receivables-related property, in-state…
How did Tennessee sales and use tax apply to automotive core charges, returned cores, equal exchanges, and full or prorated warranty replacements?
Tax applied to the net price after a returned-core trade-in, or to the full price including the core charge when no core was returned. Equal exchanges and free warranty replacements produced no…
Was specialized liquid heat-transfer fluid exempt industrial machinery when an integrated manufacturing system could not operate without it?
Yes. The specialized fluid was an integral and necessary part of the closed-loop production system, so it qualified with the system as exempt industrial machinery.
Did reusable pallet caps qualify for Tennessee's industrial-machinery sales-tax exemption when they protected products in transport and temporary storage?
No. The pallet caps were primarily storage and containment devices used during transport and temporary storage, so they did not qualify as exempt industrial machinery.
Would a publisher owe Tennessee sales or use tax when a Tennessee printer mailed its free magazines directly to recipients inside and outside Tennessee?
Tax applied to the copies addressed to Tennessee recipients, but not to copies the printer mailed directly to recipients outside Tennessee. Neither printed-material exemption covered the in-state copies.
Did a dealer owe Tennessee use tax when prospective customers and employees used inventory vehicles in a free test-drive program lasting no more than 120 days?
No tax was due if each vehicle's total use by all evaluators and employees stayed within 120 days and the vehicle was sold or returned to inventory. The Department declined to rule on dealer plates…
Did Tennessee disregard a REIT and its qualified subsidiaries, or tax the parent and passive limited-partner subsidiary because their partnership operated in Tennessee?
Tennessee treated the REIT and each qualified subsidiary as separate corporations despite federal disregarded treatment. The parent and passive limited-partner subsidiary were not doing business in…
Did an orthodontist owe Tennessee sales or use tax when purchasing corrective appliances attached to patients' teeth?
No. Corrective appliances used to align or reposition patients' teeth were exempt orthotics—or at least similar medical corrective devices—because teeth were treated as part of the skeletal system.
Did a curtain-wall fabricator qualify as a manufacturer when revenue from contracts that included installation could exceed half of annual revenue?
No on the existing structure. The fabricator did not prove that more than 50% of location revenue came from sales contracts rather than contracts that included installation. It could qualify if a…
Was the school-photography company required to collect tax on the entire picture price, including the commission retained by a school?
Yes. The photographer sold directly to students and parents, while the school acted as its collection and delivery agent. Sales tax therefore applied to the entire picture price, including the…
Did Tennessee follow an LLC's federal check-the-box classification for franchise, excise, and Hall income tax purposes?
Yes. Tennessee followed a limited liability company's valid federal classification for franchise, excise, and Hall income tax purposes. A qualifying foreign single-member LLC disregarded federally…
Could an out-of-state steel-joist manufacturer accept a resale certificate when it delivered joists directly to a Tennessee job site for a contractor-dealer?
No. The manufacturer had to collect tax when it delivered steel joists directly to a Tennessee job site for a contractor-dealer, even though some joists might later be resold. The Department lacked…
Were charges for printing, stuffing, sorting, and mailing payroll and accounts-payable checks taxable sales of printed property in Tennessee?
No. The combined check-printing and mailing charge was primarily for a nontaxable payroll or financial service, not a sale of checks as tangible personal property. Separate U.S. postage was also not…
Was pipe installed by a contractor to move municipal drinking water to storage tanks and customers exempt as industrial machinery or municipal water-system property?
The new water pipeline was taxable contractor property. It was not repair or maintenance, water distribution was not pollution control, and pipe was not a qualifying machine. Pumps and other actual…
Were retail satellite-programming subscriptions taxable telecommunications in Tennessee, and did a direct-to-home satellite provider have to collect local sales tax?
Paid satellite programming was subject to Tennessee state sales tax as telecommunications because scrambled signals and decoder access targeted paying subscribers rather than the public. But federal…
Were kinetic-therapy and pressure-reduction medical beds exempt from Tennessee sales and use tax as orthotic or similar medical support devices?
Yes. Tennessee treated both kinetic-therapy beds and pressure-reduction beds as exempt orthotic devices because they supplied movement, weight distribution, circulation support, and other body…
Did equipment in an egg producer's mash feed mill qualify for Tennessee's farm-machinery sales tax exemption, and did the $250 threshold apply to the mill as one system?
The feed-mill equipment qualified as farm machinery because producing poultry feed was a direct step in the taxpayer's integrated egg-production process and most output served that operation. But…
Were floating marina docks, walkways, a restaurant, and a convenience store real property outside Tennessee sales tax, or taxable tangible personal property under a sale-leaseback contract?
The floating marina system remained tangible personal property and was subject to Tennessee sales tax. Because physical attachment and use did not conclusively make the docks realty, the contracts'…
How did Tennessee sales tax apply when a gas manufacturer used reusable cylinders, collected refundable deposits, and charged rent after customers kept cylinders beyond a free period?
The manufacturer could buy the cylinders tax-free because they were either exempt delivery containers or property purchased for rental. Refundable security deposits were not taxable when collected,…
What Tennessee tax obligations applied to a retail store whose building crossed the state line, even though its main entrances and checkout lanes were in the neighboring state?
The retailer had to register for Tennessee sales and use, business, and franchise and excise taxes because it would maintain property and conduct business in Tennessee. Sales made in the Tennessee…
How did Tennessee allocate industrial-machinery excise tax credits when one corporation transferred machinery to a new corporation for stock in a divisive reorganization?
The transferor kept credits and carryovers for machinery it retained but had to recapture the remaining-life portion of credit on machinery transferred during its useful life. The transferee…
Was a custom disassembled building kit one single article for Tennessee's local-option sales tax cap, or did the cap apply separately to each component used by the contractor?
The kit was not one single article. The contractor used the individual components to create a building that became real property upon assembly, so the building never existed as a single article of…
Did a foreign corporation owe Tennessee use tax when its foreign-registered yacht entered Tennessee only for a 30-to-90-day vacation visit under a federal cruising license?
No. The yacht's intended 30-to-90-day vacation visit under a federal foreign-yacht cruising license was temporary; it did not come to rest or become part of Tennessee's mass of property. The ruling…
Did a company owe Tennessee business tax when it supplied both the entire management function and operating staff of a nonprofit health-plan corporation?
No. Because the company supplied both management and the entire operating staff, the industrial-classification rules assigned it the managed entity's activity rather than standalone management…
Was a single shipping-and-handling fee taxable when f.o.b.-origin freight would have been exempt but the seller could not identify the shipping and handling portions?
Yes. F.o.b.-origin common-carrier freight alone would have been nontaxable because title passed at shipment, but Tennessee provided no exclusion for handling. Because the seller combined shipping…
Which therapy beds, hospital beds, mattresses, and incontinence supplies qualified for Tennessee's medical-device exemption, and did Medicare or TennCare payment make otherwise taxable items exempt?
Prescribed acute-care therapy units and alternating-pressure mattresses were exempt orthotic support devices. Hospital beds were exempt only when the seller could prove a patient's specific medical…
Could a Tennessee affiliate financial institution apportion franchise and excise tax, and how did the ruling source its factoring, unsecured-loan, credit-approval, and receivable-servicing receipts?
Yes. The financial institution could apportion because it was taxable or conducted nexus-creating financial activity in other states. It used a single receipts factor: factored-receivable income…
Did an out-of-state manufacturer lose Public Law 86-272 protection and become subject to Tennessee franchise and excise taxes when its employees collected customer accounts and picked up defective goods and scrap for credit?
Yes. Employee visits to collect unpaid Tennessee accounts and company-truck pickups of defective products, trim, and scrap for recycling and customer credit were independent post-sale business…
Could a contractor avoid Tennessee use tax on materials bought tax-free by a municipality merely by calling itself the construction manager and having municipal employees perform the installation?
Generally no. If the company remained responsible for the construction contract, it used the municipality's tax-free materials and owed use tax even when municipal employees installed them. Tax…
Did an out-of-state equipment seller create Tennessee franchise and excise tax nexus through occasional sales calls and one to three annual post-sale visits to observe equipment startup and suggest efficiency improvements?
No, on the stated facts. Protected solicitation did not create nexus, and the unprotected post-sale startup visits—one in 1996 and no more than three in each prior year—were de minimis under…
Did a Tennessee contractor owe Tennessee sales or use tax on pipe components bought or brought into Tennessee for prefabrication before the finished units were installed in buildings outside Tennessee?
Yes. A contractor owed Tennessee sales tax on components bought in Tennessee and use tax on untaxed components brought into Tennessee for prefabrication, even though the finished piping units were…
Did a Tennessee manufacturer have to charge sales tax on separately stated freight paid to an independent contract hauler when title and risk of loss passed to the customer at the manufacturer's plant?
No. When the contract made title and risk of loss pass at the manufacturer's Tennessee plant and an independent contract hauler delivered the goods, the separately stated transportation charge was…
Did a Tennessee telemarketer owe Tennessee sales tax on magazines, books, and periodicals mailed from outside the state to Tennessee customers, and on publications delivered entirely outside Tennessee?
It had to collect Tennessee tax on most publications delivered to Tennessee customers, even when mailed from outside the state. The limited exemption for sellers whose Tennessee activity was only…
Did a Tennessee orthodontist owe sales or use tax when purchasing corrective appliances and devices that would be attached to patients' teeth?
No. Although dentists generally are treated as the users and consumers of property used in their practices, these corrective appliances qualified for a separate exemption. The Department treated…
Did a Tennessee computer company have to collect Tennessee sales tax on hardware repair and maintenance contracts sold to customers outside Tennessee?
Yes. The ruling treated warranty and service contracts for repairing tangible personal property as taxable services. Because the company entered into the obligations in Tennessee and performed the…
How did Tennessee sales tax apply when a tax-exempt hospital division provided home I.V. therapy itself, supervised another provider, or sold drugs and equipment wholesale to other home health agencies?
The hospital division's qualifying purchases were exempt, and it did not collect tax on the two packages in which it provided or supervised home health care. In the wholesale-only package,…
Did an out-of-state software company owe Tennessee franchise and excise tax merely because a corporate officer moved to Tennessee for personal reasons and worked from his own home?
No, under the unusually limited facts. The officer moved for personal reasons, paid for and maintained the home workspace himself, had no Tennessee business contacts, and performed strategic work…
Were flat-fee mobile disc jockey services for private parties, weddings, and receptions subject to Tennessee sales tax or amusement tax when no admission was charged?
No. The mobile DJ service was not one of Tennessee's enumerated taxable services, and the flat fee was not admission, membership, recreation, or equipment-use revenue subject to amusement tax. The…
Were a distributor's sales of utility poles, anchors, guy wire, and conduits exempt from Tennessee sales and use tax before the items were installed?
Yes, if the items were sold for use in providing utility services. Tennessee's definition excluded utility poles, anchors, guys, and conduits from tangible personal property and treated them as real…
Did Tennessee's structural-metal-fabricator exemption cover aluminum bought and fabricated into weir troughs for an out-of-state water-treatment plant?
No. The exemption required both a qualifying structural metal fabricator and a fabricated product listed in SIC Industry 3441. The facts did not establish the contractor's qualifying primary…
Were perforated picking tickets taxable when they combined shipping labels, a packing slip, and an internal order-gathering section?
No. The perforated ticket was treated as one article whose primary purpose was to provide shipping labels and a packing slip that accompanied the product. Although the internal order-gathering…
Which resale certificates did a Tennessee seller need when an out-of-state reseller ordered goods drop-shipped to its Tennessee customer?
Both certificates were required for the described transactions. The out-of-state reseller's home-state certificate established that the seller's customer bought for resale, while the Tennessee…
For Tennessee franchise and excise tax, how was a proposed factoring subsidiary classified, did it combine with its manufacturing parent, and how did it apportion receivable income?
The proposed receivables subsidiary was a financial institution because its factoring activities produced more than half its gross income. It filed separately from its nonfinancial manufacturing…
When did Tennessee sales tax apply to a graphic designer's consulting, layouts, production work, final art, printing, and related charges?
Most charges were taxable when the design work led to delivered tangible property. That included layouts, materials, revisions, film or photographic mechanicals, production labor, final art on…
For Tennessee franchise and excise tax, how was a factoring subsidiary classified, did it combine with its manufacturing parent, and how did it apportion receivable interest?
The proposed factoring subsidiary was a financial institution because acquiring and servicing receivables produced more than half its gross income. It filed separately from its nonfinancial…
Were sales of utility poles subject to Tennessee sales tax before the poles were erected or installed?
No. The statute excluded utility poles from tangible personal property and deemed them real property. The ruling followed a Tennessee Court of Appeals decision holding that a pole did not need to be…
Who owed Tennessee sales tax when a business custom-fabricated shutters and permanently installed every shutter in customers' buildings?
The shutter business owed tax on its raw materials as a contractor and could not use a resale certificate. Because the permanently installed custom shutters became real-property fixtures, it did not…
Did an affiliated common carrier qualify for Tennessee's exemption for repair parts shipped on its own trucks for use outside the state when its parent owned 90% of all issued stock but 100% of voting stock?
No. The exemption required the seller and carrier to satisfy a direct 100% capital-stock ownership or control test. The seller owned all voting shares but only 90% of the carrier's total issued…
How did Tennessee sales and business tax apply when a travel-packager bought lodging, meals, and entertainment and resold the combined package to tour operators?
The packager could buy the lodging, food, and entertainment for resale. Its sale to a tour operator was also a resale only with a valid Tennessee resale certificate and a reasonable belief that the…
Were membership dues paid to a qualifying Tennessee aerobic and fitness club exempt from sales tax?
Yes. The Department ruled that the club's membership dues were exempt because it met the statute's employee, operating-hours, daily-access, floor-space, and activity requirements and had obtained…
Could a moving company buy boxes with a resale certificate, and what tax applied to boxes used in interstate moves?
Yes, after registering as a dealer. The boxes were separately sold, optional, available without moving services, and valuable on their own, so the mover could buy them for resale and had to collect…
When did a road contractor processing crushed stone and hot-mix asphalt qualify as a manufacturer for Tennessee machinery, materials, and utility tax benefits?
The contractor qualified as a manufacturer at a location when at least 51% of its products and revenue came from third-party product sales, qualifying tax-funded highway or road projects, or a…
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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.