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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Did a Tennessee publisher owe sales or use tax when a Tennessee printer sent publications directly to nonresidents, either itself or through a mailer?
It depended on who hired the Tennessee mailer. No tax applied when the printer shipped or mailed publications directly out of state, or when the printer hired an independent mailer with no legal…
Were fees for a twelve-week weight-management seminar taxable when participants also received workbooks and audio tapes?
No. The flat seminar fee paid for a nontaxable service, and the workbooks and audio tapes were incidental because participants primarily sought the classes, counseling, and group support and paid no…
Did a subsidiary's tax-free liquidation into its 100% parent under I.R.C. §§ 332 and 337 create a Tennessee excise-tax gain or loss?
No. Under the Tennessee Department of Revenue policy in effect in 1996, a subsidiary's qualifying I.R.C. §§ 332 and 337 liquidation into a parent owning at least 80% produced no gain or loss…
Who owed Tennessee sales or use tax when a contractor custom fabricated awnings and permanently installed them on customers' buildings?
The awning contractor had to pay sales or use tax on its raw materials and could not buy them with a resale certificate. It did not charge customers sales tax on the lump-sum price for the custom…
Which Tennessee locality imposed local-option sales tax on paging services?
The Tennessee locality where the customer's paging-service bills were sent imposed the local-option sales tax. The Department treated that billing location as the location of the paging system being…
Did an out-of-state holding company or its machinery-manufacturing subsidiary owe Tennessee franchise, excise, sales, or use taxes when they had no Tennessee property or personnel and shipped remote sales by common carrier?
No under the stated 1996 facts. The holding company had no Tennessee activity, and the manufacturer had no Tennessee property, personnel, or in-state solicitation; it accepted orders outside the…
Did a Tennessee real-estate limited partnership or its passive foreign corporate limited partner owe Tennessee franchise and excise taxes, and how did the taxable general partner report its share?
No. Under the 1996 law applied, the limited partnership itself was not a taxable entity, and a foreign corporation whose only Tennessee connection was a passive limited-partner interest had no…
Could Tennessee assess closed years, and could a corporation use losses from those years, after it determined that returns reporting no business activity had understated its Tennessee nexus?
Tennessee could not assess the closed pre-1992 years absent a false or fraudulent return filed to evade tax. But the corporation could recompute Tennessee losses from closed years and carry them…
Were monthly Internet-access fees, excess-usage charges, and a one-time sign-up fee taxable, including when subscribers were outside Tennessee?
Monthly access, excess-usage, and sign-up fees were taxable when the Internet service originated or was received in Tennessee and was billed to a Tennessee service address. Charges billed to…
Was a prescription, non-invasive electromagnetic bone-growth stimulator exempt from Tennessee sales tax as a prosthetic device?
Yes. The bone-growth stimulator was exempt as a prosthetic device because it replaced or augmented the reduced natural healing function of a non-union fracture by stimulating bone cells to resume…
Were vegetable seeds and plants, grapevines, herbs, fruit trees, and fertilizer exempt from Tennessee sales tax, and was an exemption certificate required?
Qualifying food- or fiber-producing seeds, seedlings, plants, grapevines, herbs, and fruit trees were exempt. Fertilizer was exempt only when used to grow qualifying food or fiber, so lawn seed and…
Were separately stated charges for optional advertising, marketing, financial, technology, training, store-development, and franchise programs taxable when offered by a grocery wholesaler?
No. The separately stated optional retail-support charges were not taxable on the stated facts. If they were part of the price of products sold for resale, the resale treatment applied; if they were…
Which Internet-access, web-service, software, equipment, training, and consulting charges were taxable in Tennessee, and did the provider owe franchise and excise taxes?
Tennessee-sourced Internet-access monthly, installation, and hourly charges were taxable telecommunications, and software, modems, and textbooks delivered in Tennessee were taxable. The described…
Were processing equipment, control-building materials, and access-road materials for a municipal sewage-treatment expansion exempt from Tennessee sales and use tax?
Yes. Processing equipment, materials for the control building, and materials for access roads were exempt because the contractor used them for a municipal sewage system qualifying as industrial…
Was the full price of a vehicle roadside-assistance membership taxable when it bundled a mechanical-breakdown warranty with nontaxable benefits?
Yes. The entire membership charge was taxable because its mechanical-breakdown benefit was a taxable warranty or service contract and the agreement did not separately price its nontaxable roadside,…
Could a multistate retailer buy supplies from Tennessee vendors without Tennessee sales tax when it received them at a Tennessee warehouse for later use outside the state?
No. Supplies bought from Tennessee vendors and delivered to the retailer's Tennessee warehouse were taxable Tennessee sales even when the retailer later shipped them to stores outside the state. The…
Which prescribed home-health items did Tennessee treat as exempt medical devices, and did TennCare payment make otherwise taxable equipment exempt?
Qualifying medical-support hospital beds, canes, and insulin pumps were exempt. Glucose monitors, aspirators, medicated bandages, and TENS units were taxable; other wound-care products required…
How did Tennessee tax custom signs, installation and repair labor, raw materials, billboard work, permit fees, and sales to exempt customers?
Tax treatment depended chiefly on whether the installed sign remained personal property or became real property. Personal-property signs and related installation or repair charges were generally…
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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.