An organization sells printed educational booklets — with reading passages and questions tied to school standards — almost entirely to schools, teachers, and homeschooling parents. Are those booklet sales exempt from Tennessee sales tax as textbooks?

Plain-English summary

An organization (its identity and educational focus are redacted) produces and sells printed booklets to help teach school children. Each booklet contains short educational reading passages, photographs or pictures, and questions, all designed to track the educational standards teachers are required to cover. The booklets come in a few types — some explain required topics, some supplement lessons, and some compile excerpts from primary-source materials followed by questions. Although anyone can buy them, the organization markets them for classroom use, and almost all of its sales go to schools, teachers, and homeschooling parents. It asked the Department whether selling the booklets is subject to Tennessee sales tax.

The Department said no — the sales are exempt. Printed books are tangible personal property, which Tennessee generally taxes. But the Retailers' Sales Tax Act exempts sales of "textbooks and workbooks" (§ 67-6-329(a)(3)). A "textbook" is defined as a printed book that "contains systematically organized educational information that covers the primary objectives of a course of study," and that is not "primarily published and distributed for sale to the general public" (§ 67-6-102(91)). The Department found the booklets fit: each is organized around specific educational topics tied to state standards, with passages and reinforcing questions; individually and as a series they cover the objectives of a course of study; and they are sold mainly to schools and teachers rather than to the public. So they qualify as exempt textbooks.

The takeaway: educational materials can escape Tennessee sales tax as "textbooks" — but the exemption turns on the content being organized around a course of study and the materials being aimed at schools and teachers rather than the general public.

What this means for you

Publishers and sellers of educational materials

If you sell printed books or booklets organized around the objectives of a course of study and marketed primarily to schools, teachers, or homeschoolers — not to the general public — your sales can qualify for Tennessee's textbook exemption. The label on the product matters less than (1) whether the content is systematically organized educational information covering a course of study, and (2) who you primarily sell to.

Nonprofits and educational organizations

Even an organization that also makes its materials available to the public can qualify, as long as the booklets are genuinely course-of-study materials marketed and sold mainly to schools, teachers, and homeschooling parents. Keep evidence of how the materials map to educational standards and of your customer base.

Workbooks specifically

Tennessee separately defines and exempts "workbooks" — printed booklets containing problems and exercises in which a student writes answers or responses directly (§ 67-6-102(98)). If your product is fill-in-the-blank practice material, it may qualify on the workbook side even if it isn't a full textbook. Note that both definitions exclude "a computer or computer software," so digital versions are a separate question.

Accountants and tax professionals

This is a clean application of § 67-6-329(a)(3) and the § 67-6-102(91) definition. The two pressure points are the "course of study" content requirement and the "not primarily published and distributed for sale to the general public" limitation. General-audience trade books — even educational ones — won't qualify; materials built for and sold into the classroom will.

Common questions

Q: Are all educational books exempt from Tennessee sales tax?
A: No. Only printed materials that meet the statutory definition of "textbook" or "workbook" are exempt. A textbook must contain systematically organized educational information covering the primary objectives of a course of study and must not be primarily published for sale to the general public.

Q: Does it matter that anyone can buy the booklets?
A: Incidental public availability didn't defeat the exemption here, because the booklets were primarily marketed and sold to schools, teachers, and homeschooling parents. A product genuinely aimed at the general public would not qualify.

Q: What's the difference between a "textbook" and a "workbook"?
A: A textbook contains organized educational information covering a course of study; a workbook is a printed booklet of problems and exercises in which a student writes answers or responses directly. Both are exempt, and neither includes a computer or computer software.

Q: Does this exemption cover digital or online versions?
A: The definitions expressly exclude "a computer or computer software," so electronic products are analyzed differently and are not covered by this ruling, which addressed printed booklets.

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. Confirm your own facts with a tax professional.

Citations and references

Tennessee statutes (Tenn. Code Ann.):

• § 67-6-329(a)(3) (exemption for sales of "textbooks and workbooks")
• § 67-6-102(91) (definition of "textbook"); § 67-6-102(98) (definition of "workbook") — both exclude "a computer or computer software"
• § 67-6-101 et seq. (Retailers' Sales Tax Act; retail sale of tangible personal property generally subject to sales and use tax)

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/sales/16-05.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING # 16-05
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 Tennessee sales and use tax exemption under TENN. CODE ANN. § 67-6329(a)(3) (Supp. 2015) for textbooks.
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

[TAXPAYER] (the “Taxpayer”) is a [REDACTED – ENTITY] created in [REDACTED] to promote education
about [REDACTED – EDUCATIONAL TOPICS] among [REDACTED] school children.
To achieve its [REDACTED] objectives, the Taxpayer, among other things, produces and sells
[REDACTED] (“booklets”) covering various [REDACTED– EDUCATIONAL] topics. Each booklet is

intended for students of a specific level of education ranging from [REDACTED] and contains reading
passages, photographs or pictures, and questions. All of the booklets are intended to help teachers
comply with the [REDACTED – STANDARDS] required to be taught by [REDACTED]. The booklets may
be categorized as either a “[TYPE 1] booklet,” “[TYPE 2] booklet,” or “[TYPE 3] booklet.”
The [TYPE 1] booklets are created and written to amplify and explain topics that are required to be
taught under [REDACTED– EDUCATIONAL STANDARDS]. Each booklet contains short, educational
passages followed by [REDACTED] questions related to the preceding passage. Each passage and
related set of questions constitutes a separate chapter, and each chapter corresponds with an
overarching educational topic or theme that corresponds with the [REDACTED– EDUCATIONAL]
standards. The [TYPE 1] booklets contain [REDACTED].
The [TYPE 3] booklets are intended to be used to supplement [REDACTED]. Similar to the [TYPE 1]
booklets, the [TYPE 3] booklets contain short, educational passages followed by [REDACTED]
questions and include [REDACTED]. The [TYPE 3] booklets are primarily meant to help teachers meet
[REDACTED – EDUCATIONAL GOAL]. Each topic covered by the [TYPE 3] booklets is directly related to
[REDACTED].
The [TYPE 2] booklets contain excerpts from various [REDACTED] sources, such as [REDACTED]. The
Taxpayer selected the excerpted sources based on the primary sources required to be covered in
[REDACTED – EDUCATIONAL STANDARDS]. To help the intended audience understand the passage,
the Taxpayer [REDACTED]. Excerpts are usually followed by a series of [REDACTED – QUESTIONS].
Questions may require research from sources other than the excerpted passages contained in the
booklet.
Though available for purchase by anyone, the Taxpayer markets the booklets for use in [REDACTED EDUCATION] settings, and almost all of its sales are to [REDACTED – SCHOOLS], teachers, and
homeschooling parents. The Taxpayer charges [REDACTED – AMOUNT] per booklet and
[REDACTED].
RULING
Are the Taxpayer’s sales of the booklets exempt from the Tennessee sales and use tax pursuant to
TENN. CODE ANN. § 67-6-329(a)(3) (Supp. 2015)?
Ruling: Yes. The booklets meet the definition of “textbook” under TENN. CODE ANN. § 67-6102(91) (Supp. 2015), since they contain organized educational information, cover a course
of study, and are primarily marketed and sold to school systems and teachers, not the
1
general public.
ANALYSIS
Under the Retailers’ Sales Tax Act, TENN. CODE ANN. § 67-6-101 et seq., the sale of tangible personal
property is generally subject to the Tennessee sales and use tax. However, TENN. CODE ANN. § 67-61

The titles of the booklets to which this Letter Ruling applies are: [REDACTED]; and any booklets sold by the Taxpayer that are
substantially similar in format to the ones reviewed.

329(a)(3) (Supp. 2015) exempts from the Tennessee sales and use tax sales of “textbooks and
workbooks.” The terms “textbook” and “workbook” are defined as follows:
(91) “Textbook” means a printed book that contains systematically organized
educational information that covers the primary objectives of a course of study. A
textbook may contain stories and excerpts of popular fiction and nonfiction writings,
but does not include a book primarily published and distributed for sale to the
general public. The term “textbook” does not include a computer or computer
software.
....
(98) “Workbook” means a printed booklet that contains problems and exercises in
which a student may directly write answers or responses to the problems and
exercises. The term “workbook” does not include a computer or computer software. 2
The Taxpayer’s booklets meet the definition of “textbook.” Each booklet contains “systematically
organized educational information” that purposefully corresponds to [REDACTED – EDUCATIONAL
STANDARDS]. Every chapter teaches students about a specific [EDUCATIONAL] topic, and the
chapters are generally followed by [REDACTED] questions to reinforce the student’s comprehension,
further establishing the educational nature of the booklets. Furthermore, the booklets, both in each
booklet’s individual capacity, and as a series, cover the “primary objectives of a course of study.” An
individual booklet is a stand-alone lesson plan that teaches the reader about an [EDUCATIONAL]
topic. For example, the [REDACTED– TYPE 1] booklet introduces students to [REDACTED] by teaching
the reader about the [REDACTED– EDUCATIONAL TOPICS]; and the [REDACTED– TYPE 2] booklet
teaches about [REDACTED] through the use of excerpts from primary source materials. Additionally,
the series of booklets as a whole covers a course of study aimed at teaching students about
[REDACTED – EDUCATIONAL TOPICS].
Finally, the Taxpayer’s primary customers are school systems and teachers, and are not “primarily
published and distributed for sale to the general public.” Instead, the Taxpayer publishes and
markets the booklets to be used in conjunction with the [REDACTED – EDUCATIONAL STANDARDS].
Accordingly, the Taxpayer’s sales of booklets are exempt from the Tennessee sales and use tax.

Grant Marshall
Assistant General Counsel

2

APPROVED:

Richard H. Roberts
Commissioner of Revenue

DATE:

June 9. 2016

TENN. CODE ANN. § 67-6-102 (Supp. 2015).