When a company bundles devices, streaming, games, cloud storage, and other products into one monthly subscription price, is the whole package subject to Tennessee sales tax, and at what local rate?
Plain-English summary
A technology company headquartered outside Tennessee sells a long list of products and services — devices, an ad-free music streaming service, a streaming TV/video service, a digital magazine-and-newspaper service, online games and a game subscription, cloud storage, and warranty and insurance plans. Today it sells each one separately. It now wants to bundle several of them together for one non-itemized monthly price (often at a discount), and asked the Department how Tennessee sales tax applies. The Department gave four answers.
The core rule — one taxable item taxes the whole bundle. When two or more items are sold for a single price and at least one is taxable, the entire price is taxable. Tennessee builds this into the definition of "sales price," which includes "the value of exempt personal property... bundled together and sold... as a single product." So even though a few of the company's items would be exempt on their own — its digital magazines and newspapers and its cloud data storage are not taxed — bundling them with taxable items (devices, music, TV, games, warranties) makes the full package price taxable.
How the individual pieces are classified. Devices are taxable tangible personal property. The music service is a taxable specified digital product (digital audio works); the TV/video service is a taxable specified digital product (digital audio-visual works); the games and game subscription are taxable video game digital products (which Tennessee treats as computer software); and the warranty/service contracts are taxable. By contrast, the digital magazine and newspaper service is not taxed (periodicals are carved out of "digital books"), and the cloud storage is not taxed (data storage is exempt).
Devices sold or leased inside the bundle. If the package includes a device on an installment plan, the company must report the device's total selling price upfront — in the month the contract is signed — and pay the tax on the full price then, not spread across the installments. If instead the device is leased or rented, the tax follows the contract terms: either on the lump sum at execution or on a monthly/periodic basis as the contract provides.
Which local rate applies. Tennessee's general rate is 7% state plus a local rate of 1.5%–2.75%, but specified digital products carry a special uniform 2.5% local rate in lieu of the regular local rate. When a bundle mixes a specified digital product with something taxed at the general rate, the general local rate applies to the entire package — the special 2.5% digital rate can't be used for a mixed bundle. The 2.5% digital rate survives only when the bundle contains nothing but specified digital products (or specified digital products plus non-taxable items).
What this means for you
Subscription, streaming, and bundle sellers
The lesson is blunt: a single non-itemized price plus one taxable item equals tax on the whole charge. If you bundle taxable and exempt products for one price, you can't carve out the exempt portion — its value rides along in the taxable sales price. If you want exempt items (digital periodicals, data storage) to stay exempt, sell them separately or separately state them so they aren't swept into a single bundled price.
Selling devices on installment or lease inside a bundle
A device sold on an installment plan is reported and taxed at its full price up front, in the month the contract is signed — installment billing doesn't spread out the tax. A leased or rented device is taxed on the contract's terms instead (lump sum at execution, or per period). Build that timing into how you invoice and remit.
Picking the right local rate (and sourcing the sale)
Specified digital products normally enjoy a flat 2.5% local rate, but a mixed bundle loses it — the general local rate applies to the whole package. For sourcing: a bundle bought at a Tennessee storefront is sourced to that location, and its local rate applies. A bundle sold from out of state is sourced to where tangible property is shipped or delivered if it includes a physical item; any warranty contract, specified digital product, or video game digital product in the package is sourced to the purchaser's Tennessee residential or primary business address. A package with no physical item is sourced to that residential or primary business address.
Accountants and tax professionals
The bundling rule lives in the "sales price" definition, § 67-6-102(85)(A)(vi). Specified digital products and video game digital products are taxed under § 67-6-233(a); data storage is exempt under § 67-6-231(b) and digital periodicals under the "digital books" carve-out at § 67-6-102(31); warranty/service contracts are taxable under § 67-6-208(a). The 7% state rate is § 67-6-202(a) (and § 67-6-205(a) for services); the special 2.5% local rate for specified digital products is § 67-6-702(g)(4). Installment timing is Rule 1320-05-01-.28; lease/rental timing is Rule 1320-05-01-.32(2). The principle that bundling applies to services as well as goods traces to Tomkats Catering, Inc. v. Johnson and Letter Ruling 14-10.
Common questions
Q: I bundle taxable and tax-exempt items for one monthly price. Can I tax only the taxable part?
A: No. When at least one item in a single-price bundle is taxable, Tennessee taxes the entire price — the exempt items' value is included in the taxable "sales price." To keep exempt items exempt, don't fold them into one non-itemized bundle.
Q: My bundle includes a phone on a monthly installment plan. When do I owe the tax?
A: Up front. You report the device's total selling price and pay the tax in the month you enter the installment contract, not spread across the monthly payments. (A leased or rented device is taxed on the contract's terms instead.)
Q: Specified digital products get a 2.5% local rate. Does my bundle?
A: Only if the bundle is entirely specified digital products (or those plus non-taxable items). Mix in anything taxed at the general rate and the whole package is taxed at the general local rate.
Q: Are digital magazines and cloud storage taxable in Tennessee?
A: Sold on their own, no — digital newspapers and magazines and data storage aren't taxed. But bundled into a single-price package with taxable items, their value becomes part of the taxable bundle price.
Q: Can I rely on this ruling?
A: Not directly. A Tennessee letter ruling binds the Department only as to the taxpayer and exact facts it addressed and cannot be relied on by anyone else. Confirm your own facts with a tax professional.
Citations and references
Tennessee statutes:
- Tenn. Code Ann. § 67-6-102(85)(A)(vi) (sales price includes the value of exempt personal property bundled together and sold with taxable property as a single product)
- Tenn. Code Ann. § 67-6-233(a) (tax on specified digital products and video game digital products)
- Tenn. Code Ann. § 67-6-208(a) (warranty or service contracts are taxable)
- Tenn. Code Ann. § 67-6-231(b) (data storage is not subject to tax)
- Tenn. Code Ann. § 67-6-102(31) (digital newspapers and magazines not taxed; "digital books" excludes periodicals)
- Tenn. Code Ann. § 67-6-202(a), § 67-6-205(a) (7% state rate on tangible personal property and taxable services)
- Tenn. Code Ann. § 67-6-702(g)(4) (uniform 2.5% local rate on specified digital products, in lieu of the regular local option rate)
Tennessee rules:
- Tenn. Comp. R. & Regs. 1320-05-01-.28 (installment sales — report the total selling price in the month the contract is entered)
- Tenn. Comp. R. & Regs. 1320-05-01-.32(2) (leased or rented property — tax computed on the contract's terms)
Related authorities:
- Tomkats Catering, Inc. v. Johnson, 2001 WL 1090516 (Tenn. Ct. App.) (bundling principle applied to transactions involving services)
- Tenn. Dep't of Revenue Letter Ruling 14-10 (Oct. 14, 2014) (bundled taxable and non-taxable transactions)
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/21-04.pdf
Original ruling text
TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING #21-04
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 Tennessee sales and use tax to a monthly subscription package containing both
taxable and non-taxable products and services.
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 technology company headquartered in [STATE] that develops and
sells consumer electronics, computer software, online services, and related support. The Taxpayer
also sells a range of third-party digital content and applications. The Taxpayer sells its products and
services either at its brick and mortar retail locations or online through various company websites and
[REDACTED]. The Taxpayer currently offers [NUMBER] kinds of products and services on a stand-alone
1
basis. Customers may purchase certain products for one lump-sum payment or through a monthly
installment plan. Customers may purchase services through a monthly subscription.
CURRENT STAND-ALONE OFFERINGS
1. Devices
The Taxpayer’s devices include [REDACTED], and a host of accessories. Customers currently purchase
devices for a lump sum payment or on a monthly installment plan.
2. [SUBSCRIPTION MUSIC]
[SUBSCRIPTION MUSIC] is an ad-free music streaming service that allows users to select music to
stream to their devices on demand or they can listen to existing, curated playlists. Customers receive
a temporary download of the audio/video file as part of this service. Customers subscribe to
[SUBSCRIPTION MUSIC] for a monthly fee.
3. [SUBSCRIPTION TV]
[SUBSCRIPTION TV] is a suite of TV and video content available for consumers on a subscription basis.
The Taxpayer offers original content and third-party content available to stream on demand. Linear
programming and live streaming are limited with this service. Customers pay a monthly subscription
fee for access to [SUBSCRIPTION TV].
4. Online Magazines and Newspapers [REDACTED]
The Taxpayer sells a digital newspaper and magazine subscription service, [REDACTED], which gives
users unlimited access to over [NUMBER] magazine titles, and approximately [NUMBER] newspapers.
Customers pay a monthly subscription fee for access to [ONLINE MAGAZINES AND NEWSPAPERS].
5. Games
The Taxpayer sells a wide variety of online games through its digital distribution platform,
[REDACTED], which allows customers to discover and download applications and games and purchase
in-application content. Customers may buy individual games/content to download. The Taxpayer also
offers a video game subscription service, [REDACTED], that allows subscribers all-you-can-play access
to over [NUMBER] games for one monthly price. [VIDEO GAME SUBSCRIPTION SERVICE] allows
subscribers to download games to their [REDACTED] devices, but a subscription is required to play a
game. If the subscription is canceled, the game can no longer be played unless the subscription is
renewed.
6. [CLOUD STORAGE]
[CLOUD STORAGE] is the Taxpayer’s cloud service that stores [USER CONTENT], keeping them up to
date and available across multiple [REDACTED] devices, [REDACTED]. Customers subscribe to [CLOUD
STORAGE] for a monthly fee based the amount of additional storage needed.
2
7. [WARRANTY CONTRACTS]
The Taxpayer offers a range of warranty, support, and insurance options for its customers. Most of
the Taxpayer’s hardware comes with a [TIME PERIOD] limited warranty and [TIME PERIOD] of tech
support at no additional cost. This service is called [REDACTED]. [REDACTED] extends that coverage
up to [TIME PERIOD] and provides additional features such as [TIME PERIOD] tech support and
accidental damage coverage. [WARRANTY CONTRACT] may be purchased with the device or
separately, as long as the separate purchase is made within [TIME PERIOD] of the device purchase.
8. [INSURANCE]
[REDACTED] offers an insurance product that gives customers the option of paying to have a
replacement option (after paying a deductible) if their [DEVICE] is lost or stolen. Customers may
purchase a [TIME PERIOD] plan by paying a lump sum amount, or they may enter into a monthly
payment plan that covers a [TIME PERIOD]. [INSURANCE] may be purchased with [A DEVICE] or
separately, as long as the separate purchase is made within [TIME PERIOD] of the [DEVICE] purchase.
NEW SUBSCRIPTION PACKAGE OFFERINGS
The Taxpayer plans to offer consumers a new way to purchase existing products, services, and
support that the Taxpayer traditionally has offered on a stand-alone basis. Specifically, the Taxpayer
intends to offer packages for a set monthly subscription price that include specific products and/or
services. 1 Although the Taxpayer’s packages contain distinct and identifiable products that can be sold
separately, all packages will be offered for one non-itemized monthly price. In many instances, the
price for the subscription packages will include a discount as an incentive for customers to bundle
their purchases. If a package includes a device, the device will be sold through a monthly installment
plan or will be available for lease or rental on a month to month basis.
RULINGS
1.
When the Taxpayer charges one non-itemized price for a package that includes a taxable item,
does the Tennessee sales tax apply to the full price of the package?
Ruling: Yes. Tennessee sales tax applies to the sale of the entire package when the package
contains at least one taxable item and is sold for one-non-itemized price.
2.
What is the impact if the Taxpayer includes the sale of a device on an installment plan as part
of the package?
Ruling: When the Taxpayer sells a device on an installment plan, the Taxpayer is required to
report the total selling price of the device upfront for Tennessee sales tax purposes. Sales tax
should be applied to remaining taxable products in the package consistent with this ruling.
3.
1
What is the impact if the Taxpayer leases or rents a device as part of the package?
[REDACTED].
3
Ruling: When the Taxpayer leases or rents a device as part of the package, sales tax is
computed based on the terms of the contract, either on the lump sum at the time of execution,
or on a monthly or periodical basis.
4.
Where items in the Taxpayer’s packages are subject to different local sales tax rates, what local
sales tax rate applies to the entire package?
Ruling: Product-based tax rates and exemptions are exceptions to the application of the
general state and local sales tax rates. When the Taxpayer sells packages that include multiple
items and one of the items is taxable at the general rate, the entire package is taxable at the
general rate.
ANALYSIS
Under the Retailers’ Sales Tax Act, the retail sale in Tennessee of tangible personal property and
specifically enumerated services is subject to the sales tax, unless an exemption applies. 2 A “sale” is
defined to include “the furnishing of any of the things or services” taxable under the Retailers’ Sales
Tax Act. 3 Two of the “things” specifically taxable are the “retail sale, lease, licensing or use of specified
digital products” and “video game digital products” that are transferred to or accessed by subscribers
or consumers in Tennessee. 4 Specified digital products include digital books, music, and videos as
defined in the statute. 5 “’Video game digital product” is also defined, but unlike the other specified
digital products, is expressly categorized as computer software. 6
Tennessee’s sales tax is imposed at the general state rate of 7% and the local rate of between 1.5%
and 2.75%. 7 Specified digital products, however, are subject to the state rate of 7% plus a uniform
local rate of 2.5%. 8 Data storage 9 and digital periodicals 10 are not subject to tax.
Many transactions involve more than the sale of a single item or service. When a transaction involves
items or services that are all independently subject to sales tax, the entire transaction is subject to
TENN. CODE ANN. § 67-6-201; see also, TENN. CODE ANN. § 67-6-102(74), (82), and (95)(A)(defining “[r]etail sale” as “any sale, lease,
or rental for any purpose other than for resale, sublease, or subrent” and “[t]angible personal property” as including “prewritten
computer software”).
2
3
TENN. CODE ANN. § 67-6-102(84)(C).
4
TENN. CODE ANN. § 67-6-233(a) (2018).
TENN. CODE ANN. § 67-6-102(30) (defining “digital audio works,” “digital audio-visual works,” and “digital books”). The definition
of “digital audio-visual works” excludes “video greeting cards sent by electronic mail or video or electronic games.”
5
6
TENN. CODE ANN. § 67-6-102(102).
7
TENN. CODE ANN. § 67-6-202(a) (Supp. 2020) and TENN. CODE ANN. § 67-6-205(a) (Supp. 2020).
8
TENN. CODE ANN. § 67-6-702(g)(4) (Supp. 2020).
9
TENN. CODE ANN. § 67-6-231(b) (2018).
10
TENN. CODE ANN. § 67-6-102(31). The definition of “digital books” excludes “newspapers, magazines, periodicals, chat room
discussions [and] weblogs” and Tennessee has not separately imposed a tax on digital newspaper and magazine subscriptions.
4
sales tax. Similarly, if all the items or services are independently either not subject to sales tax or are
exempt, the entire transaction is not subject to sales tax. Here, the Taxpayer is proposing to combine
products that are subject to different tax rates and different tax treatment and offer them for a single
price.
The question then is whether, based on the products included, the package is taxable. And, if it is,
what is the correct tax rate to apply? In Tennessee, whenever two or more items are sold for a single
sales price and at least one of the items is subject to sales tax, the entire sales price is subject to the
sales tax. This treatment as applied to tangible and digital personal property is set forth in the
definition of “sales price,” which states that the sales price includes “[t]he value of exempt personal
property given to the purchaser where taxable and exempt personal property have been bundled
together and sold by the seller as a single product or piece of merchandise.” 11 Based on guidance
from Tennessee case law related to the taxation of separate and distinct services, 12 the Department
historically has applied this treatment to transactions involving services as well as those involving only
tangible or digital personal property. 13
TAXABILITY OF PACKAGES
The Taxpayer’s packages include varied products that are subject to different tax treatment when sold
individually. The Taxpayer’s devices are taxable tangible personal property. 14 [SUBSCRIPTION MUSIC]
is a taxable specified digital product because it is a sale of electronically transferred digital audio
works. 15 [SUBSCRIPTION TV] is also a taxable specified digital product because it is a sale of
electronically transferred digital audio-visual works. 16 The Taxpayer’s online sales of games and
gaming subscriptions are subject to sales and use tax because they involve the sale or use of video
game digital products. 17 The Taxpayer’s warranty offerings [REDACTED] are taxable warranty or
service contracts. 18 [REDACTED] is a non-taxable digital magazine and newspaper service. 19 And the
Taxpayer’s cloud service, [REDACTED], is a non-taxable data storage. 20
11
TENN. CODE ANN. § 67-6-102(85)(A)(vi).
12
See generally Tomkats Catering, Inc. v. Johnson, 2001 WL 1090516, at *2.
See Tenn. Dept. of Rev. Ltr. Rul. 14-10 (Oct. 14, 2014), available at https://www.tn.gov/ content/ dam/tn/revenue/ documents/
rulings/sales/14-10.pdf (last visited April 15, 2021).
13
14
TENN. CODE ANN. § 67-6-102(95)(A).
15
TENN. CODE ANN. § 67-6-102(29).
16
TENN. CODE ANN. § 67-6-102(30).
17
TENN. CODE ANN. § 67-6-102(102).
“The retail sale of, use of, or subscription to a warranty or service contract covering the repair or maintenance of tangible
personal property” is subject sales tax. TENN. CODE ANN. § 67-6-208(a) (2018).
18
TENN. CODE ANN. § 67-6-102(31). The definition of “digital books” excludes “newspapers, magazines, periodicals, chat room
discussions [and] weblogs” and Tennessee has not separately imposed a tax on digital newspaper and magazine subscriptions.
19
20
TENN. CODE ANN. § 67-6-231(b).
5
Packages Without a Device
The Taxpayer’s packages may consist of a combination of taxable specified digital products, taxable
video game digital products, taxable warranty contracts, 21 non-taxable digital newspapers and
magazines, and/or non-taxable cloud services. TENN. CODE ANN. § 67-6-102(85)(A) provides that the
sales price of a good or service equals the “total amount of consideration . . . for which personal
property or services are sold.” Thus, when the Taxpayer bundles taxable items with nontaxable items
and they are sold for a single charge, the entire charge is subject to taxation. 22
Packages Including a Device
A package may include the sale of a device on an installment plan. The definition of “sale” includes “a
transfer of possession or control of property under a security agreement or deferred payment plan
that requires the transfer of title upon completion of the required payments.” 23 When the Taxpayer
sells a device on an installment plan, the Taxpayer is required to report the total selling price and pay
the applicable sales or use tax due on the entire selling price in the monthly tax period in which the
parties enter into the contract. 24 Thus, the Taxpayer should report tax on the full price sale of the
device when calculating the amount of tax due on a package including the sale of a device on an
installment plan.
Instead of including the sale of a device, a package may include the lease or rental of a device. 25 When
the package includes the lease or rental of a device, the terms of the contract provide the basis for
computing the tax. 26 “The tax is to be computed on a billing basis, either on the lump sum at the time
of execution, or on a monthly or periodical basis as provided in the contract.” 27
APPLICABLE TAX RATE
TENN. CODE ANN. § 67-6-202(a) (Supp. 2020) imposes tax at a state tax rate of 7% on sales of tangible
personal property sold at retail in Tennessee. TENN. CODE ANN. § 67-6-205(a) (Supp. 2020) imposes the
same rate of tax on the sales of all taxable services in the state. TENN. Code ANN §§ 67-6-233(a) and 676-208(a) impose the same rate of tax on sales of specified digital products, video game digital products
and warranty contracts. Additionally, cities and counties are authorized to impose a local option sales
21
TENN. CODE ANN. § 67-6-208(a) and § 67-6-233(a).
22
See, e.g., Tomkats Catering, Inc. v. Johnson, 2001 WL 1090516, at *2; Tenn. Dept. of Rev. Ltr. Rul. 14-10 (Oct. 14, 2014), supra
note 13.
23
TENN. CODE ANN. § 67-6-102(84)(I).
24
TENN. COMP. R. & REGS. 1320-05-01-.28.
25
“’Lease or rental’ means any transfer of possession or control of tangible personal property for a fixed or indeterminate term
for consideration.” TENN. CODE ANN. § 67-6-102(51).
26
TENN. COMP. R. & REGS. 1320-05-01-.32(2).
27
Id.
6
tax not to exceed 2.75% on sales and use of the same privileges subject to tax under this chapter. 28
However, Tennessee also imposes a special local sales tax of 2.5% on sales of specified digital products
that applies in lieu of the regular local option sales tax imposed by the city or county. 29 The special
rate for specified digital products only applies to those products.
Where the Taxpayer bundles specified digital products with other products taxed at the general rate,
the general rate applies to the entire transaction. Similarly, if the Taxpayer includes both taxable and
exempt items in a package the exempt items become subject to sales tax. In both cases the general
rate will supersede the special rate because the specified digital product local tax rate can only be
applied to those specifically listed products but not to bundles that include other taxable products.
Consequently, the special rate for specified digital products will apply to the bundle if it includes only
specified digital products or only specified digital products and non-taxable products (i.e.,
[REDACTED]).
SOURCING
In general, for state and local sales tax purposes, sales of tangible personal property and taxable
services are sourced according to the following guidelines:
•
If a sale is made from a location in Tennessee, the sale is sourced to the business location
making the sale. 30
•
If a sale is made from out-of-state, the seller is required to collect local tax based on the ship
to address or delivery destination. 31
Specified digital products transferred to or accessed by subscribers or consumers are sourced to
Tennessee as follows:
•
Purchaser/subscriber receives the electronically transferred digital product or digital code at
a Tennessee residential or primary business street address in Tennessee, or
•
Seller’s business records or the address obtained from the purchaser during the sale indicates
a Tennessee billing address. 32
Sales of warranty or service contracts covering tangible personal property or computer software are
sourced to Tennessee as follows:
28
TENN. CODE ANN. § 67-6-702.
29
TENN. CODE ANN. § 67-6-702(g)(4).
30
TENN. CODE ANN. § 67-6-501; TENN. COMP. R. & REGS. 1320-05-01-.74(1). TENN. COMP. R. & REGS. 1320-05-02-.05(1).
TENN. CODE ANN. § 67-6-233(g); TENN. CODE ANN. § 67-6-504(m) (Supp. 2020). See also, Sales and Use Tax Notice #19-05 Local
Sales Tax Reporting by Out-of-State Dealers.
31
32
TENN. CODE ANN. Sec. 67-6-233(g).
7
•
Warranty or service contracts sold as part of the sale of tangible personal property or software
are sourced the same as tangible personal property or computer software.
•
If the extended care plan is purchased separate from the [DEVICE], sourcing is based on the
location of the covered device and if such location is not known, sourced to the purchaser’s
residential or primary business address. 33
Conclusion
Consistent with the authority above, if the Taxpayer’s package is purchased from a business location
in Tennessee, then the sale is sourced to that location and the local sales tax rate that applies is the
local rate for the business location. If the sale is made from out-of-state, then tax applies as follows:
(1) If the package includes tangible personal property that is shipped or delivered to the
purchaser or the purchaser’s donee in Tennessee, the sale should be sourced to Tennessee.
The local sales tax applies to the sale of the package at the rate for the location where the
tangible personal property is shipped or delivered. Any warranty contract, specified digital
product, and/or video game digital product included in the package is considered to be
sourced consistent with the residential or primary business address of the purchaser.
(2) If the package does not include tangible personal property, but includes a specified digital
product, a video game digital product, and/or a warranty contract covering tangible personal
property, the sale of the package should be sourced to the Tennessee purchaser’s/subscriber’s
residential or primary business address. The general local sale tax rate will apply unless the
package includes only specified digital products or specified digital products and non-taxable
products.
33
APPROVED:
David Gerregano
Commissioner of Revenue
DATE:
4/28/2021
TENN. CODE ANN. § 67-6-208(c)(3). See also, Sales and Use Tax Notice #15-11 Sales of Warranty or Service Contracts.
8