Can a company that invests $50M+ to expand its Tennessee headquarters and consolidate out-of-state operations claim Tennessee's headquarters-facility sales-and-use-tax credit — and which equipment and which jobs count?

Plain-English summary

A company that runs its national headquarters in Tennessee plans to invest more than $50 million to (1) consolidate the operations of its out-of-state "business centers" into a single Tennessee location and (2) expand that Tennessee headquarters — much of it new computer hardware and software for a global ERP system, plus HVAC, communications equipment, furniture, and fixtures. It expects to keep its current headcount and add at least 100 net new full-time jobs paying at least 150% of Tennessee's average occupational wage. It asked the Department five questions about the qualified headquarters facility sales-and-use-tax credit (Tenn. Code Ann. § 67-6-224). Because it filed its application before July 1, 2011, the pre-2011 version of the statute governs (the 2011 amendments apply only to proposals received after that date).

What the credit is. Section 67-6-224(a) gives a company that establishes a "qualified headquarters facility" a credit for all the state sales or use tax it pays — except the 0.5% portion — on "qualified tangible personal property." It's a major economic-development incentive aimed at landing and growing corporate headquarters in Tennessee.

The five holdings:

1. Eligibility (Yes, if it establishes a qualified headquarters facility). The credit is available to a taxpayer that establishes a qualified headquarters facility in Tennessee.

2. Does the expansion-by-consolidation count as a "qualified headquarters facility"? (Yes, if it makes the minimum investment in time.) A "qualified headquarters facility" is a headquarters facility where the taxpayer makes the minimum investment during the investment period (§ 67-6-224(b)(9)). The company's site is already its national headquarters, and the statute lets an expansion — connected or separate — qualify too. So the expansion is a headquarters facility; the open conditions are the dollar threshold and timing.

3. Do HVAC, communications gear, computer hardware/software, furniture, fixtures, and labor count toward the "minimum investment"? (Yes.) The statute lists computer software, furniture, and fixtures by name; the unlisted items (computer hardware, HVAC, communications equipment) are properly treated as "equipment." All of them — plus labor — count toward the minimum investment (§ 67-6-224(b)(7)). Land and inventory do not count.

4. Are those items "qualified tangible personal property" eligible for the credit? (Yes — with conditions.) The same items (other than labor) are "qualified tangible personal property" under § 67-6-224(b)(11), provided they are purchased or leased during the investment period, are not replacing property that already generated a § 67-6-224(a) credit, and — for leased property — only as to lease payments made within the investment period. (Supplies and repair parts never qualify.)

5. Which new jobs are "headquarters staff employees"? (Most — but NOT customer-service or call-center jobs.) "Headquarters staff employees" are executive, administrative, or professional workers performing headquarters-related functions (§ 67-6-224(b)(5)). The company's administrative-support, information-technology, finance, and management positions qualify. But call-center jobs are out because operating a call center is expressly excluded from "headquarters related functions and services" (§ 67-6-224(b)(4)), and customer-service jobs are out because they aren't executive, administrative, or professional.

The thresholds in detail. The "minimum investment" (§ 67-6-224(b)(7)(A)) is either $50,000,000 in newly constructed, expanded, or remodeled buildings, or $10,000,000 plus at least 100 net new full-time jobs created during the investment period that pay at least 150% of the state average occupational wage (defined in § 67-4-2004) for the January of the year the jobs are created. The "investment period" (§ 67-6-224(b)(6)) runs from one year before construction starts to one year after substantial completion, capped at six years; the new jobs must be genuinely new to Tennessee and filled within that period (§ 67-6-224(b)(8)).

This sales-and-use-tax credit is the companion to Tennessee's franchise & excise job-tax credit for the same kind of headquarters expansion, analyzed in LR 13-23 (issued the same day to the same kind of taxpayer) — both use the same "headquarters staff employee" definition and the same call-center/customer-service exclusion.

What this means for you

Companies weighing a Tennessee headquarters investment

If you're building, expanding, or remodeling a corporate headquarters in Tennessee, § 67-6-224 can rebate nearly all of the state sales and use tax (everything but the 0.5% slice) on the equipment, software, furniture, and fixtures you buy or lease for it. The keys are hitting the minimum investment ($50M, or $10M + 100 qualifying jobs) inside the investment-period window, and buying the property during that window. Plan purchases and lease terms so they land inside the period — lease payments stretching past it don't qualify, and replacements of property that already earned the credit don't either.

Watch the job definitions if you're counting on the $10M-plus-jobs path

The 100-job threshold counts only "headquarters staff employees" — executive, administrative, and professional roles doing headquarters functions. Call-center and customer-service headcount does not count, even in a large consolidation. If your jobs math depends on hitting 100, confirm the roles are genuinely administrative, IT, finance, management, or similar — not customer support.

Accountants and economic-development advisors

This is the pre-2011 version of § 67-6-224 (proposal filed before July 1, 2011). The 2011 amendments — including a requirement that qualified property be "directly related to the creation of the new full-time employee jobs" — apply only to later proposals, so check which version governs your client. Unlisted property (hardware, HVAC, comms) folds into "equipment." Pair this sales/use credit with the F&E job-tax-credit analysis in LR 13-23 for the same headquarters project.

Common questions

Q: What does the qualified headquarters facility credit actually give you?
A: A credit for all the state sales or use tax you pay on qualified tangible personal property for the facility — except the 0.5% portion — under § 67-6-224(a).

Q: What's the minimum investment?
A: Either $50,000,000 in newly built/expanded/remodeled buildings, or $10,000,000 plus at least 100 net new full-time jobs paying at least 150% of the state average occupational wage, all during the investment period (§ 67-6-224(b)(7)).

Q: Do computer hardware and HVAC count even though the statute doesn't name them?
A: Yes. The Department treats computer hardware, HVAC, and communications equipment as "equipment," so they count toward the minimum investment and qualify as qualified tangible personal property (subject to the timing and anti-replacement conditions).

Q: Do call-center and customer-service jobs count toward the 100-job threshold?
A: No. Operating a call center is expressly excluded from "headquarters related functions," and customer-service jobs aren't executive, administrative, or professional, so neither counts as a "headquarters staff employee."

Q: Can I rely on this letter ruling?
A: No. A Tennessee letter ruling binds the Department only as to the specific taxpayer and facts it was issued to, and it can be revoked or modified. The statute has also been amended since. Confirm your own situation with a tax professional.

Citations and references

Tennessee statutes (Tenn. Code Ann.):

• § 67-6-224(a) (Supp. 2010) (the qualified headquarters facility sales/use tax credit — all state tax except 0.5%)
• § 67-6-224(b)(9), (b)(3), (b)(1) ("qualified headquarters facility"; "headquarters facility"; "facility")
• § 67-6-224(b)(7)(A)–(B) ("minimum investment" — $50M, or $10M + 100 jobs; includable costs; land/inventory excluded)
• § 67-6-224(b)(11) ("qualified tangible personal property"; exclusions)
• § 67-6-224(b)(5), (b)(4) ("headquarters staff employees"; "headquarters related functions and services," excluding call centers)
• § 67-6-224(b)(6), (b)(8) ("investment period"; "new full-time employee job")
• § 67-6-202(a) (sales tax on retail sales of TPP); § 67-6-102(89)(A) (tangible personal property); §§ 67-6-101 to -907 (Retailers' Sales Tax Act); §§ 67-6-301 to -396 (exemptions)
• § 67-4-2004(3) (Supp. 2010) ("average occupational wage")

Legislation noted:

• Act of May 21, 2011, ch. 508, §§ 1, 8–9, 34 (2011 amendments to § 67-6-224 — apply only to proposals received after July 1, 2011)

Companion ruling:

• TN Letter Ruling 13-23 (franchise & excise job-tax credit for the same kind of qualified headquarters facility expansion; same "headquarters staff employee" definition and call-center/customer-service exclusion)

Source

• Landing page: https://www.tn.gov/revenue/tax-resources/legal-resources/tax-rulings.html
• Original PDF: https://www.tn.gov/content/dam/tn/revenue/documents/rulings/fae/13-24fe.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING # 13-24
Letter rulings are binding on the Department only with respect to the individual taxpayer
being addressed in the ruling. This ruling is based on the particular facts and
circumstances presented, and is an interpretation of the law at a specific point in time. The
law may have changed since this ruling was issued, possibly rendering it obsolete. The
presentation of this ruling in a redacted form is provided solely for informational purposes,
and is not intended as a statement of Departmental policy. Taxpayers should consult with a
tax professional before relying on any aspect of this ruling.
SUBJECT
The application of the qualified headquarters facility credit under TENN. CODE ANN. § 67-6-224
(Supp. 2010) for purposes of the Tennessee sales and use tax.
SCOPE
This letter ruling is an interpretation and application of the tax law as it relates to a specific set of
existing facts furnished to the Department by the taxpayer. The rulings herein are binding upon
the Department, and are applicable only to the individual taxpayer being addressed. This letter
ruling may be revoked or modified by the Commissioner at any time. Such revocation or
modification shall be effective retroactively unless the following conditions are met, in which
case the revocation shall be prospective only:
(A) The taxpayer must not have misstated or omitted material facts involved in
the transaction;
(B) Facts that develop later must not be materially different from the facts upon
which the ruling was based;
(C) The applicable law must not have been changed or amended;
(D) The ruling must have been issued originally with respect to a prospective or
proposed transaction; and
(E) The taxpayer directly involved must have acted in good faith in relying upon
the ruling; and a retroactive revocation of the ruling must inure to the taxpayer’s
detriment.
FACTS
In [YEAR], [TAXPAYER] (the “Taxpayer”), [REDACTED], established a qualified
headquarters facility (the “Facility”) pursuant to TENN. CODE ANN. § 67-6-224. The Facility
consists of one location in the [STATE OF TENNESSEE]. The Taxpayer provides a wide range
of [SERVICES]. [CUSTOMERS] are serviced by [BUSINESS CENTERS] in [CITY],
Tennessee, [AND OTHER LOCATIONS OUTSIDE OF TENNESSEE]. The [BUSINESS
CENTER] in [TENNESSEE] is a part of the Facility.
1

The Taxpayer plans to invest additional capital into the Facility, estimating a total capital
investment between [DATE], and [DATE] (the “Investment Period”) of over $50,000,000 (the
“Investment”). This Investment will accomplish two goals. First, it will consolidate the
operations of the Taxpayer’s [BUSINESS CENTERS] into one [BUSINESS CENTER] located
in [CITY], Tennessee. The operations at the Taxpayer’s [BUSINESS CENTERS] in
[LOCATIONS OUTSIDE TENNESSEE] will be shut down or downsized, and moved to [CITY
IN TENNESSEE]. Second, the Investment will expand the Facility in [CITY IN TENNESSEE].
A significant portion of the Investment will consist of purchasing, leasing, or licensing computer
software and hardware related to a new and expanded enterprise resource planning system (“ERP
System”), as well as other information technology systems in connection with the expansion of
the [TENNESSEE BUSINESS CENTER]. The Taxpayer will house the global ERP System
software and hardware in its Facility located in [TENNESSEE]. The Taxpayer will also
purchase, lease, or license HVAC equipment, communications equipment, furniture, fixtures,
and labor as part of the Investment.
The Taxpayer predicts that it will retain the current job headcount of [NUMBER] at the Facility
as of [THE DAY BEFORE THE INVESTMENT PERIOD BEGINS], and that it will create at
least 100 net new full-time jobs during the Investment Period that pay at least 150% of
Tennessee’s average occupational wage. These jobs will include full-time customer service
positions, call center positions, administrative support positions, information technology
positions, finance positions, and management and other professional positions.
[THE TAXPAYER FILED ITS APPLICATION AND INVESTMENT PLAN WITH THE
DEPARTMENT OF REVENUE PRIOR TO JULY 1, 2011].
RULINGS

1. Is the Taxpayer eligible for the Tennessee sales and use tax credit under TENN. CODE ANN.
   § 67-6-224(a) (Supp. 2010)?
   Ruling: Yes, provided that the Taxpayer establishes a “qualified headquarters facility” in
   Tennessee, as discussed in the responses to subsequent questions.
2. Will the Taxpayer’s proposed expansion of the Facility through the consolidation of the
   operations of its [BUSINESS CENTERS] qualify as a “qualified headquarters facility” for
   the purposes of this Investment Period?
   Ruling: Yes, provided that the Taxpayer makes the statutorily required minimum investment
   during the Investment Period.
3. Will the Taxpayer’s purchase, lease, or license of HVAC equipment, communications
   equipment, computer hardware, computer software, furniture, fixtures, and labor for its
   Facility be included in the calculation of the “minimum investment” as set forth in TENN.
   CODE ANN. § 67-6-224(b)(7) (Supp. 2010)?
   Ruling: Yes.
   2

4. With respect to the Taxpayer’s Facility, are the HVAC equipment, communications
equipment, computer hardware, computer software, furniture, and fixtures considered
“qualified tangible personal property” as defined in TENN. CODE ANN. § 67-6-224(b)(11)
(Supp. 2010)?
Ruling: Yes.

5. Will full-time customer service, call center, administrative support, information technology,
   finance, management and other professional positions constitute “headquarters staff
   employees” as defined in TENN. CODE ANN. § 67-6-224(b)(5) (Supp. 2010)?
   Ruling: The administrative support, information technology, finance, and management
   positions constitute “headquarters staff employees” as defined in TENN. CODE ANN. § 67-6224(b)(5) (Supp. 2010), but the customer service and call center positions do not.
   ANALYSIS
   Under the Retailers’ Sales Tax Act,1 the retail sale in Tennessee of tangible personal property is
   subject to the sales tax, unless an exemption applies.2
   The qualified headquarters facility sales tax credit is available to qualifying taxpayers, however,
   to offset sales or use taxes paid to the state of Tennessee with respect to certain purchases of
   tangible personal property. TENN. CODE ANN. § 67-6-224(a) (Supp. 2010)3 provides that a
   taxpayer “who establishes a qualified headquarters facility in this state shall be eligible for a
   credit of all state sales or use taxes paid to the state of Tennessee, except tax at the rate of onehalf percent (0.5%), on the sales or use of qualified tangible personal property.”4
   1

Tennessee Retailers’ Sales Tax Act, ch. 3, §§ 1-18, 1947 Tenn. Pub. Acts 22, 22-54 (codified as amended at TENN.
CODE ANN. §§ 67-6-101 to -907 (2013)).
2

TENN. CODE ANN. § 67-6-202(a) (2013) imposes the tax on the retail sale of tangible personal property. “Tangible
personal property” includes “property that can be seen, weighed, measured, felt, or touched, or that is in any other
manner perceptible to the senses.” TENN. CODE. ANN. § 67-6-102(89)(A) (2013). Most exemptions to the sales tax
can be found in TENN. CODE ANN. §§ 67-6-301 to -396 (2013).

3

The General Assembly amended the qualified headquarters facility credit provisions and the qualified headquarters
facility relocation expense credit provisions in 2011. The amendments apply only to written proposals received by
the Department of Revenue or the Department of Economic and Community Development after July 1, 2011. See
Act of May 21, 2011, ch. 508, §§ 1, 8-9, 2011 Tenn. Pub. Acts. Because the Taxpayer filed its application and
investment plan with the Department of Revenue prior to July 1, 2011, the law in effect prior to the 2011
amendments governs.
4

TENN. CODE ANN. § 67-6-224(b)(11) (Supp. 2010) defines “qualified tangible personal property” as “building
materials, machinery, equipment, furniture and fixtures used exclusively in the qualified headquarters facility and
purchased or leased during the investment period and computer software used primarily in the qualified headquarters
facility and purchased or leased during the investment period.” There are a number of exclusions from this
definition, however. “Qualified tangible personal property” does not include supplies or repair parts. Id. “Qualified
tangible personal property” also does not include any payments with respect to leases of qualifying tangible personal
property that extend beyond the investment period. Id. Finally, “qualified tangible personal property” does not
include any materials, machinery, equipment, furniture, or fixtures that replace tangible personal property that
previously generated a credit under TENN. CODE ANN. § 67-6-224(a). Id.

3

1. QUALIFIED HEADQUARTERS FACILITY CREDIT ELIGIBILITY
The Taxpayer will be eligible for the qualified headquarters facility sales and use tax credit if it
establishes a “qualified headquarters facility” in Tennessee, as discussed below.5

2. QUALIFIED HEADQUARTERS FACILITY
   The Taxpayer’s Facility will be considered a qualified headquarters facility for purposes of
   TENN. CODE ANN. § 67-6-224(a) (Supp. 2010) and for purposes of this Investment Period,
   provided the requirements discussed below are met.
   A “qualified headquarters facility” is “a headquarters facility where the taxpayer has made the
   minimum investment during the investment period.”6 Thus, the Taxpayer’s proposed expansion
   will qualify as a “qualified headquarters facility” for purposes of TENN. CODE ANN. § 67-6224(a) (Supp. 2010) if: 1) the expansion is of a headquarters facility; 2) the Taxpayer has made
   the required minimum investment; and 3) such investment occurs during the Investment Period.
   The Taxpayer’s proposed expansion meets the first requirement of being a “headquarters
   facility.” A “headquarters facility” is “a facility in this state that houses the international,
   national, or regional headquarters of a taxpayer, where headquarters staff employees are located
   and employed, and where the primary headquarters related functions and services are
   performed.”7 “Facility” is defined as “a building or buildings, either newly constructed,
   expanded, or remodeled, housing headquarters staff employees and located in a county or
   metropolitan statistical area in this state.”8 In addition, “[a]n expansion of a headquarters facility
   may be connected to or separate from a headquarters facility or other facilities located in a
   county or metropolitan statistical area in this state.”9
   The Taxpayer established its national headquarters in Tennessee in [YEAR] at the Facility, and
   the Taxpayer now proposes to expand the Facility by consolidating [BUSINESS CENTER]
   operations at that location. Since the Facility has already been designated a qualified
   headquarters facility, and such designation requires the location to be a “headquarters facility,”
   any expansion of the Facility would also qualify as a headquarters facility.
   The second requirement will be met if the Taxpayer makes the required minimum investment.
   TENN. CODE ANN. § 67-6-224(b)(7)(A) (Supp. 2010) provides that the term “minimum
   investment” means:

5

See TENN. CODE ANN. § 67-6-224(a) (Supp. 2010).

6

TENN. CODE ANN. § 67-6-224(b)(9) (Supp. 2010).

7

TENN. CODE ANN. § 67-6-224(b)(3) (Supp. 2010).

8

TENN. CODE ANN. § 67-6-224(b)(1) (Supp. 2010).

9

Id.

4

(i) A minimum investment by the taxpayer and lessor to the taxpayer of fifty
million dollars ($50,000,000) or more in a building or buildings, either newly
constructed, expanded, or remodeled; or
(ii) A minimum investment by the taxpayer and the lessor to the taxpayer of
ten million dollars ($10,000,000) in a building or buildings, either newly
constructed, expanded, or remodeled, along with the creation of not fewer than
one hundred (100) net new full-time employee jobs10 created during the
investment period, that pay at least one hundred fifty percent (150%) of the state’s
average occupational wage, as defined in § 67-4-2004,11 for the month of January
of the year in which the full-time employee jobs are created.
The minimum investment “may include, but is not limited to, the purchase price of an existing
building and the cost of building materials, labor, equipment, furniture, fixtures, computer
software, parking facilities and landscaping, but shall not include land or inventory.”12
The Taxpayer proposes to invest more than $50 million in addition to creating at least 100 net
new full-time employee jobs. Provided that the Taxpayer actually invests $50 million on the
items specified above, or invests at least $10 million and creates 100 net new full-time jobs
meeting the criteria in TENN. CODE ANN. § 67-6-224(b)(7)(A)(ii) (Supp. 2010), the Taxpayer will
meet the minimum investment for purposes of TENN. CODE ANN. § 67-6-224(a) (Supp. 2010).
Finally, the Taxpayer will meet the third requirement if it makes the minimum investment during
the “investment period.”
TENN. CODE ANN. § 67-6-224(b)(6) (Supp. 2010) defines “investment period” to mean that “the
investment must be made during the period beginning one (1) year prior to the start of the
construction, expansion, or remodeling and ending one (1) year after substantial completion of
the construction, expansion, or remodeling of the facility.” In no event shall the investment
period exceed six years.13
Although the Taxpayer estimates that the total capital investment will occur between [DATE],
and [DATE], as illustrated above, the investment period for purposes of TENN. CODE ANN. § 676-224(a) (Supp. 2010) starts one year prior to the start of construction, expansion, or remodeling,
and ends one year after substantial completion of the same.
10

TENN. CODE ANN. § 67-6-224(b)(8) (Supp. 2010) defines “new full-time employee job” to mean “full-time
headquarters staff employee jobs that are new to the state of Tennessee and, for at least ninety (90) days prior to
being filled by the taxpayer, did not exist in Tennessee as a job position of the taxpayer or of another business
entity.” The new full-time employee jobs must be created and filled within the investment period. Id. An employee
in a new full-time employee job may be employed at a temporary location in this state, pending completion of
construction or renovation work at the qualified headquarters facility. Id.
11

TENN. CODE ANN. § 67-4-2004(3) (Supp. 2010) defines “average occupational wage” as “the average wage for all
industries as reported by the department of labor and workforce development in the most recent annual quarterly
census of employment and wages super sector date for the state, aggregate of all ownerships.”

12

TENN. CODE ANN. § 67-6-224(b)(7)(B) (Supp. 2010).

13

TENN. CODE ANN. § 67-6-224(b)(6) (Supp. 2010).

5

If the Taxpayer makes the required minimum investment during the period beginning one year
prior to the start of construction, expansion, or remodeling, and ending at the earlier of six years
later or one (1) year after the substantial completion of construction, expansion, or remodeling,
then the Taxpayer will meet the third requirement.
Consequently, the Taxpayer’s proposed expansion will qualify as a qualified headquarters
facility, provided that the Taxpayer makes the necessary minimum investment and such
investment occurs during the investment period.

3. MINIMUM INVESTMENT – ITEMS PURCHASED, LEASED, OR LICENSED
   The Taxpayer’s purchase, lease, or license of HVAC equipment, communications equipment,
   computer hardware, computer software, furniture, fixtures, and labor for its Facility will be
   included in the calculation of the minimum investment as set forth in TENN. CODE ANN. § 67-6224(b)(7) (Supp. 2010).
   As explained above, the “minimum investment” is generally a threshold level of investment by
   the taxpayer in “a building or buildings, either newly constructed, expanded, or remodeled,”14
   and “may include, but is not limited to, the purchase price of an existing building and the cost of
   building materials, labor, equipment, furniture, fixtures, computer software, parking facilities
   and landscaping.”15 “Minimum investment” does not, however, include “land or inventory.”16
   Several of the items that the Taxpayer intends to purchase, lease, or license are enumerated in the
   statute, such as computer software, fixtures, and furniture. The only non-enumerated items are
   computer hardware, HVAC equipment, and communications equipment, but those items are
   properly considered equipment for purposes of TENN. CODE ANN. § 67-6-224(b)(7) (Supp. 2010).
   Consequently, all of the HVAC equipment, communications equipment, computer hardware,
   computer software, furniture, fixtures, and labor that the Taxpayer purchases, leases, or licenses
   for its headquarters will be included in the calculation of the Taxpayer’s minimum investment
   under TENN. CODE ANN. § 67-6-224(b)(7) (Supp. 2010).
4. QUALIFIED TANGIBLE PERSONAL PROPERTY
   With respect to the Taxpayer’s Facility, the HVAC equipment, communications equipment,
   computer hardware, computer software, furniture, and fixtures are properly considered “qualified
   tangible personal property” as defined in TENN. CODE ANN. § 67-6-224(b)(11) (Supp. 2010).
   “Qualified tangible personal property” is defined as “building materials, machinery, equipment,
   furniture and fixtures used exclusively in the qualified headquarters facility and purchased or
   leased during the investment period and computer software used primarily in the qualified
   14

TENN. CODE ANN. § 67-6-224(b)(7)(A) (Supp. 2010).

15

TENN. CODE ANN. § 67-6-224(b)(7)(B) (Supp. 2010) (emphasis added).

16

Id.

6

headquarters facility and purchased or leased during the investment period.”17 The definition
excludes, however, supplies and repair parts, payments with respect to leases of qualifying
tangible personal property that extend beyond the investment period, and materials, machinery,
equipment, furniture, or fixtures that replace tangible personal property that previously generated
a credit under TENN. CODE ANN. § 67-6-224(a).18
Several of the items that the Taxpayer intends to purchase or lease are enumerated in the statute,
such as computer software, fixtures, and furniture. The only non-enumerated items are computer
hardware, HVAC equipment, and communications equipment, but those items are properly
considered equipment for purposes of TENN. CODE ANN. § 67-6-224(b)(11) (Supp. 2010).
Consequently, all of the HVAC equipment, communications equipment, computer hardware,
computer software, furniture, and fixtures the Taxpayer purchases or leases for its Facility will
qualify as qualified tangible personal property, provided that the Taxpayer purchases, leases, or
licenses the items during the investment period, the items are not being purchased to replace
tangible personal property that previously generated a credit under TENN. CODE ANN. § 67-6224(a), and, with respect to leased property, applies only as to lease payments made during the
investment period.

5. HEADQUARTERS STAFF EMPLOYEES
   All employee positions that the Taxpayer proposes to create, except for the customer service and
   call center positions, are considered headquarters staff employee positions within the meaning of
   TENN. CODE ANN. § 67-6-224(b)(5) (Supp. 2010).
   “Headquarters staff employees” means “executive,19 administrative,20 or professional workers21
   performing headquarters-related functions and services.”22 “Headquarters related functions and
   services” in turn is defined to mean “those functions involving administrative, planning, research
   and development, marketing, personnel, legal, computer or telecommunications services
   17

TENN. CODE ANN. § 67-6-224(b)(11) (Supp. 2010) (emphases added). In 2011, the General Assembly amended
the law to add a new requirement that the items used in the qualified headquarters facility be “directly related to the
creation of the new full-time employee jobs” in order to be considered qualified tangible personal property. See Act
of May 21, 2011, ch. 508, §§ 1, 9, 2011 Tenn. Pub. Acts (codified at TENN. CODE ANN. § 67-6-224(b)(11) (2013)).
This change is not relevant for the Taxpayer’s proposal in question as it only applies to “any written proposal by the
department of economic and community development or the department of revenue on or after [July 1, 2011].” Id. at
§ 34.

18

TENN. CODE ANN. § 67-6-224(b)(11) (Supp. 2010).

19

“An executive employee is a full-time employee who is primarily engaged in the management of all or part of the
enterprise.” TENN. CODE ANN. § 67-6-224(b)(5) (Supp. 2010).

20

“An administrative employee is a full-time employee who is not primarily involved in manual work and whose
work is directly related to management policies or general headquarters operations.” Id.

21

“A professional employee is an employee whose primary duty is work requiring knowledge of an advanced type
in a field of science or learning. This knowledge is characterized by a prolonged course of specialized study.” Id.

22

Id. (footnotes added).

7

performed by headquarters staff employees on an international, national, or regional basis.”23
The definition of “headquarters related functions and services” specifically excludes, however,
“functions involving . . . operating a call center.”24
The Taxpayer intends to create a number of employee positions that are enumerated in the
statute, such as administrative and management positions. Other positions the Taxpayer intends
to create also fall within the statute, though not named. Examples of those types of positions
include finance and information technology jobs, which are executive and professional positions.
But some of the positions the Taxpayer intends to create are explicitly excluded from the
definition of “headquarters staff employees.” By definition, call center employees cannot
perform “headquarters related functions and services.”25 Customer service positions are similarly
excluded because they cannot be properly considered executive, administrative, or professional
positions within the meaning of TENN. CODE ANN. § 67-6-224(b)(5) (Supp. 2010).
In summary, the full-time administrative support, information technology, finance, and
management positions created or relocated by the Taxpayer in connection with the headquarters
facility expansion meet the definition of headquarters staff employees under TENN. CODE ANN.
§ 67-6-224(b)(5), but customer service and call center positions do not.

R. John Grubb II
Senior Tax Counsel

APPROVED:

Richard H. Roberts
Commissioner of Revenue

DATE:

December 20, 2013

23

TENN. CODE ANN. § 67-6-224(b)(4) (Supp. 2010).

24

Id.

25

Id.

8