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 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…
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…
Is the charge to install a household appliance subject to Tennessee sales tax, and does it matter whether the appliance is free-standing or built-in?
It depends on whether the installed appliance stays tangible personal property or becomes part of the building. The Department ruled (in an advisory, non-binding revenue ruling) that the charge to ins…
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…
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 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 company sells access to a web-based interface that lets users send, receive, and manage text messages and other communications from one screen. Are its charges for that interface subject to Tennessee sales and use tax?
Yes. The company's charges for its web-based messaging interface are subject to Tennessee sales and use tax — as the sale of 'ancillary services,' a specifically enumerated taxable service (§ 67-6-205…
A company buys software, hosts it on its own servers outside Tennessee, and has its Tennessee employees access it remotely to do their work and to support its affiliates. Are its software purchases or its affiliate support fees subject to Tennessee sales and use tax?
No to both questions. (1) The fees the company charges its Affiliates for support services are NOT taxable, because those services aren't specifically enumerated under Tennessee law — and it is the co…
A Tennessee company assembles a manufacturer's products from parts the manufacturer supplies, drop-ships them, and also provides technical support and warranty support. Which of those charges are subject to Tennessee sales and use tax?
It depends on the charge. (1) The company's fees for ASSEMBLING the manufacturer's products — including the related Materials Fees and Shipping Fees — ARE taxable as fabrication of tangible personal p…
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 company pays third-party vendors for software the vendors build and host to convert and translate data between two incompatible records-management systems. The company and its clients never access or control that software. Are those charges subject to Tennessee sales and use tax?
No. The charges the company pays its records-management vendors are not subject to Tennessee sales and use tax, because the vendors are providing the nontaxable service of converting digital products.…
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…
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 IT staffing/contract-employee services subject to Tennessee sales tax — including software development, help desk support, repairs, and reimbursed travel expenses?
It depends on the task. The Department ruled that when an IT staffing company's contract employees work on-site for a client, creating or programming COMPUTER SOFTWARE on the client's premises is a ta…
Are fees a company charges to manage clients' cooperative advertising funds — tracking balances, processing reimbursement claims, and reporting — subject to Tennessee sales tax?
No. The Department ruled that fees for managing a client's cooperative advertising fund — maintaining the Co-op database and balances, fielding customer calls about fund usage and claims, processing a…
Which items and services bought to expand a Tennessee manufacturing plant qualify for the industrial-machinery sales-and-use-tax exemption — and can the manufacturer's contractors buy them tax-free?
Most of it is exempt, but not all. The Department (in an advisory revenue ruling) applied Tennessee's INDUSTRIAL MACHINERY exemption (Tenn. Code Ann. § 67-6-206(a)) to a long list of items a manufactu…
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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.