Are subscriptions to print and electronic magazines, sales of advertising space in them, and access to other online publications and databases subject to Tennessee sales and use tax?

Plain-English summary

A nonprofit publisher — an IRC § 501(c)(3) corporation headquartered outside Tennessee — sells a portfolio of magazines in both print and electronic form, sells advertising space in them, and gives subscribers access to a set of other online publications and searchable databases (research libraries, directories, manuals, and the like). It asked whether any of those three things are subject to Tennessee sales and use tax. The Department answered no to all three.

1. Print and electronic magazine subscriptions — exempt. The print magazines are mailed into Tennessee from out of state, and the publisher has no in-state activity, so they fall squarely within Tennessee's exemption for "magazines and books that are distributed and sold to consumers by United States mail or common carrier" (§ 67-6-329(a)(6)). The electronic versions aren't taxable either: Tennessee's "specified digital products" tax reaches "digital books," but the definition of digital books specifically excludes newspapers, magazines, and periodicals, and the state has never separately taxed digital magazine subscriptions. A companion provision, § 67-6-329(d), reinforces this — a digital good is exempt when its tangible equivalent is exempt.

2. Advertising space — not taxed. Under a long-standing Department rule, the sale of advertising space — in newspapers, magazines, on billboards, in commercials — is not subject to Tennessee sales and use tax. So the publisher owes no tax on the ad space it sells in either the print or electronic editions.

3. Other online publications and databases — nontaxable information services. The extra material subscribers can reach are repositories of information that customers access for the information itself. Subscriptions to information services are excluded from the taxable "specified digital products" category (§ 67-6-233(d)), and the remotely-accessed-software statute (§ 67-6-231(b)) reiterates that information services aren't taxed. The databases run on software and let subscribers search within them — which could look like taxable computer software — but that search functionality is merely incidental to the information the customer is really after. Under the true object test, when the non-taxable component is the true object and any taxable software is merely incidental, the whole charge is non-taxable.

What this means for you

Publishers and media companies selling into Tennessee

If you mail print magazines or books into Tennessee from out of state and do nothing else in the state, those subscriptions are exempt under § 67-6-329(a)(6). Electronic magazine, newspaper, and periodical subscriptions are likewise outside Tennessee's digital-products tax — periodicals are carved out of the "digital books" definition. The general rule to remember: if the tangible version is exempt, the digital equivalent is exempt too.

Selling advertising space

Advertising space — print or digital — is not a taxable sale in Tennessee. That comes from a rule (1320-05-01-.99), not just this one ruling, so it applies broadly to anyone selling ad space in publications.

Database, research-library, and directory services

Giving subscribers access to a body of information they search and read is a nontaxable information service, even though it's delivered through software and includes a search box. The search tool is incidental; the information is the true object. But watch the line: if you start charging separately for software the customer operates as a tool (rather than for access to your information), the analysis can flip to taxable. Compare Letter Ruling 22-07, where customers used the software themselves to build their own advertising and the charge was taxable.

Accountants and tax professionals

The print exemption is § 67-6-329(a)(6); the digital-periodical carve-out is in the "digital books" definition at § 67-6-102(31), reinforced by § 67-6-329(d); the advertising-space rule is Tenn. Comp. R. & Regs. 1320-05-01-.99; and the information-services carve-outs are § 67-6-233(d) and § 67-6-231(b), with § 67-6-102(96)(B) keeping information services out of taxable telecommunications. The incidental-software analysis follows the true object test of Letter Ruling 14-10.

Common questions

Q: Are digital magazine and newspaper subscriptions taxable in Tennessee?
A: No. Tennessee taxes "specified digital products," but its definition of taxable "digital books" specifically excludes newspapers, magazines, and periodicals, and the state hasn't separately taxed digital magazine or newspaper subscriptions. Print magazines mailed in from out of state are separately exempt under § 67-6-329(a)(6).

Q: Do I charge sales tax on advertising space I sell in my publication?
A: No. Tennessee rule 1320-05-01-.99 says sales of advertising space — including in newspapers and magazines — are not subject to sales and use tax.

Q: We sell subscription access to searchable databases. Is that taxable?
A: Under this ruling, no. Access to a repository of information that customers read and search is a nontaxable information service. The software and search box are merely incidental under the true object test — provided the true object is the information, not a software tool the customer operates.

Q: Can I rely on this ruling for my own business?
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. § 67-6-329(a)(6) (exemption for magazines and books distributed and sold to consumers by U.S. mail or common carrier, where the seller's only in-state activities relate to printing, storage, labeling, delivery, or news gathering)
- Tenn. Code Ann. § 67-6-102(31) (definition of "digital books" excludes newspapers, magazines, periodicals, chat-room discussions, and weblogs)
- Tenn. Code Ann. § 67-6-329(d) (a specified digital good is exempt when the equivalent in tangible form is exempt)
- Tenn. Code Ann. § 67-6-233(d) (subscriptions to information services are excluded from taxable specified digital products)
- Tenn. Code Ann. § 67-6-231(b) (remotely accessed software is taxable; information services are not)
- Tenn. Code Ann. § 67-6-102(96)(B) (information services excluded from "telecommunications service")
- Tenn. Code Ann. § 67-6-102(18) (computer software is a set of coded instructions designed to cause a computer to perform a task)

Tennessee rule:
- Tenn. Comp. R. & Regs. 1320-05-01-.99 (sales of advertising space, including in newspapers, magazines, billboards, and commercials, are not subject to sales and use tax)

Related authorities:
- Tenn. Dep't of Revenue Letter Ruling 14-10 (Oct. 14, 2014) (the "true object" test for transactions involving both taxable and non-taxable components)
- Beare Co. v. Tenn. Dep't of Revenue, 858 S.W.2d 906, 908 (Tenn. 1993) (undefined statutory terms are given their natural and ordinary meaning — here, "magazine")

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/22-06.pdf

Original ruling text

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.

The application of Tennessee sales and use tax to print and electronic magazines, publications, and
databases.

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.

[TAXPAYER] (“Taxpayer”) is a nonprofit, IRC § 501(c)(3) corporation headquartered in [STATE OTHER
THAN TENNESSEE]. The Taxpayer provides customers with several products, including subscription
access to electronic versions of its portfolio of magazines featuring [REDACTED- SPECIFIC CONTENT]

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focused on [REDACTED], as well as print versions of the same (collectively, “Primary Publications”). The
Taxpayer’s print versions of its Primary Publications are distributed from a location outside of
Tennessee on a weekly basis via the U.S. Postal Service as first-class mail. The print versions of its
Primary Publications are delivered to the U.S. Postal Service at a location outside of Tennessee and
any news gathering and reporting is performed remotely. The Taxpayer does not have any activities
in Tennessee. Electronic versions of the Taxpayer’s Primary Publications are available daily, by email
or through the Taxpayer’s website. The Taxpayer also sells advertising space within the print and
electronic versions of the Primary Publications.
Additionally, the Taxpayer offers customers with subscription access to electronic versions of its
Primary Publications access to other publications and information available electronically through the
Taxpayer’s website, including: [OTHER PUBLICATIONS AND DATABASES] (collectively, “Other
Publications and Databases”).
The Taxpayer’s [RESEARCH] Library allows subscribers to access the following information:
[INFORMATION]. The Taxpayer’s [REDACTED] publication allows subscribers to access [REDACTED],
amending protocols, documents related to [REDACTED], and news related to [REDACTED]. The
[REDACTED] Directory provides information for [REDACTED] professionals, [REDACTED] officials, and
[REDACTED] organizations. [REDACTED – INDUSTRY SPECIFIC INFORMATION]. Lastly, the [REDACTED]
Manual includes access to [REDACTED] training materials and [REDACTED] training manuals.
Each of the Taxpayer’s publications allows subscribers a limited search capacity. Subscribers can
search for a specific word solely within the publication that they subscribe to and narrow search
results by selecting a specific jurisdiction, subject matter, date, or similar variable.

1.

Are subscriptions to the Taxpayer’s portfolio of print and electronic versions of its Primary
Publications subject to Tennessee sales and use tax?
Ruling: No. Subscriptions to the print and electronic versions of the Taxpayer’s Primary
Publications are exempt from Tennessee sales and use tax.

2.

Are the Taxpayer’s sales of advertising included in its print and online publications subject to
Tennessee sales and use tax?
Ruling: No. The Taxpayer’s sales of advertising space are not subject to Tennessee sales and
use tax.

3.

Are subscriptions to the Taxpayer’s Other Publications and Databases subject to Tennessee
sales and use tax?
Ruling: No. Subscriptions to the Other Publications and Databases are not subject to
Tennessee sales and use tax because these subscriptions are considered the provision of
nontaxable information services.

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Under the Retailer’s Sales Tax Act, the retail sale in Tennessee of tangible personal property, specified
digital products,1 remotely accessed software,2 and specifically enumerated services are subject to
sales and use tax, unless an exemption applies.
1. SUBSCRIPTIONS TO PRIMARY PUBLICATIONS
Subscriptions to the print and electronic versions of the Taxpayer’s Primary Publications are exempt
from sales and use tax. Magazines and books are generally subject to Tennessee sales and use tax as
sales of tangible personal property; however, TENN. CODE ANN. § 67-6-329(a)(6) (Supp. 2021) provides
the following exemption for:
Magazines and books that are distributed and sold to consumers by United States mail
or common carrier, where the only activities of the seller or distributor in this state are
those activities having to do with the printing, storage, labeling and/or delivery to the
United States mail or common carrier of the magazines or books, or the maintenance
of raw materials with respect to those activities, notwithstanding that the seller or
distributor maintains employees in the state solely in connection with the production
and quality control of the printing, storage, labeling and/or delivery, or in connection
with news gathering and reporting.
The term “magazine” is not defined in Tennessee’s sales and use tax laws or regulations; in the
absence of a statutory definition the term must be given its natural and ordinary meaning. 3 MerriamWebster defines the word “magazine” as “a print periodical containing miscellaneous pieces (such as
articles, stories, poems) and often illustrated.” 4 The Taxpayer’s print versions of its Primary
Publications meet this definition and would be considered magazines, as its print publications contain
[REDACTED- SPECIFIC CONTENT] on [REDACTED]. Additionally, the Taxpayer distributes its Primary
Publications through the U.S. Postal Service from outside of this state and has no other in-state
activity. Therefore, the print versions of the Taxpayer’s Primary Publications are exempt from
Tennessee sales and use tax under TENN. CODE ANN. § 67-6-329(a)(6).
Although specified digital products are generally subject to Tennessee sales and use tax, the electronic
versions of the Taxpayer’s Primary Publications are exempt because electronic magazines are not
considered taxable specified digital products. The definition of “specified digital products” includes
digital books; however, the definition of “digital books” specifically excludes “newspapers, magazines,
periodicals, chat room discussions [and] weblogs.” 5 Tennessee does not separately impose a tax on

1

TENN. CODE ANN. § 67-6-233 (2018).

2

TENN. CODE ANN. § 67-6-231 (2018).

3

See Beare Co. v. Tenn. Dep’t of Revenue, 858 S.W. 2d 906, 908 (Tenn. 1993).

4

Magazine, MERRIAM-WEBSTER, https://www.merriam-webster.com/dictionary/magazine (last visited May 16, 2022).

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TENN. CODE ANN. § 67-6-102(31) (Supp. 2021).

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digital newspaper and magazine subscriptions. Thus, the Taxpayer’s subscriptions to electronic
versions of its Primary Publications are not subject to sales and use tax.6
2. ADVERTISING SPACE
The Taxpayer sells advertising space to businesses in both its print and electronic versions of its
Primary Publications. Under TENN. COMP. R. & REGS. 1320-05-01-.99 (1974), the sale of advertising space,
including in newspapers, magazines, billboards, and commercials is not subject to sales and use tax
in Tennessee. Thus, the Taxpayer is not subject to Tennessee sales and use tax on its sales of
advertising space in both the print and electronic versions of its Primary Publications.
3. OTHER PUBLICATIONS AND DATABASES
The Taxpayer’s provision of electronic subscription access to the Other Publications and Databases
are information services that are not subject to sales and use tax. Subscriptions to information
services are excluded from specified digital products subject to tax under TENN. CODE ANN. § 67-6233(d) (2018). Furthermore, TENN. CODE ANN. § 67-6-231(b) (2018), which provides for the taxation of
remotely accessed software, reiterates that information services are not subject to sales and use tax.
Information services are also specifically excluded from the definition of telecommunications services
under TENN. CODE ANN. § 67-6-102(96)(B) (Supp. 2021). The Other Publications and Databases are
repositories of information. The customer accesses the Other Publications and Databases provided
by the Taxpayer for their information content. As such, the Taxpayer’s provision of subscription access
to the Other Publications and Databases are properly classified as information services that are not
subject to Tennessee sales and use tax.
Granted, access to the electronic publications and databases must take place through some software
function, and subscribers can perform searches for specific terms within the website; generally, this
could be considered the furnishing of taxable computer software.7 However, considering the limited
functionality of the software, these access and search functions are merely incidental to the
information services the customers are accessing. Under the true object test that is used to determine
the taxability of a product that involves taxable and non-taxable items, when the non-taxable
component is the true object, and the taxable components are merely incidental, the transaction is
not subject to sales and use tax.8 Therefore, the incidental use of computer software to access the
Taxpayer’s Other Publications and Databases does not subject the Taxpayer’s offerings to the
Tennessee sales and use tax.

The definition of “digital books” works in tandem with TENN. CODE ANN. § 67-6-329(d), which states the “sale at retail, use,
distribution and storage for use or consumption in this state of the following specified digital goods is specifically exempted
from the tax … any specified digital good, if the sale, lease, licensing and use of the equivalent in a tangible form is exempt from
taxation under this chapter.” Because magazines are exempt in tangible form, they are likewise exempt in electronic form.
6

Computer software is a set of coded instructions designed to cause a computer to perform a task. TENN. CODE ANN. § 67-6102(18).
7

8

See generally Tenn. Dept. of Rev. Ltr. Rul. 14-10 (Oct. 14, 2014) for an application and full analysis of the true object test.

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APPROVED:

David Gerregano
Commissioner of Revenue

DATE:

8/8/2022

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