Which med-spa treatments, products, and memberships are subject to Tennessee sales and use tax?

Plain-English summary

A medical spa whose treatments are performed or managed by physicians asked Tennessee how sales and use tax applies across its menu — IV therapy, Botox and fillers, facials, peels, body contouring, supplements, skincare, oxygen therapy, lab work, and memberships. Two rules do almost all the work:

1. Tennessee taxes tangible goods and only the services it specifically lists. A service that isn't on the statutory list of "enumerated" taxable services is non-taxable — even if it's done with machines and sold for a fee.
2. Prescription drugs and medical oxygen for human use are exempt. Tennessee defines "drug" broadly (a compound intended to affect the structure or function of the body) and "prescription" broadly (an order from a licensed practitioner). But dietary supplements are carved out of "drug," so they stay taxable.

Applying that, the menu split three ways:

• Exempt as prescription drugs / medical oxygen (for human use, dispensed under a prescription): IV nutrition therapy (a compounded drug, not a dietary supplement, because it's infused rather than ingested), injectable neurotoxins (Botox and similar), injectable dermal fillers, the chemical solution in medium-to-deep skin peels, and hyperbaric oxygen therapy. The disposable needles, syringes, and IV bags used to administer the IV drug are exempt too (a separate disposable-medical-supplies exemption).
• Non-taxable services (not on Tennessee's enumerated list): hydrafacials, PRP hair restoration, cryolipolysis (fat-freezing), red-light bed therapy, blood work, and the memberships (which only buy a discount — an intangible right).
• Taxable tangible personal property: nutraceutical supplements (dietary supplements are excluded from "drug") and retail skincare products (sold without a prescription). Superficial skin peels that don't require a prescription are also not exempt.

What this means for you

Medical spas, wellness clinics, and aesthetic practices

Your tax answer usually turns on two questions: Is this a good or a service? and if it's a drug, is it dispensed under a prescription? Hands-on procedures you perform (facials, fat-freezing, PRP, light therapy, blood draws) are typically non-taxable services. Drugs you administer under a prescription (IV nutrients, neurotoxins, fillers, prescription-grade peel solutions, medical oxygen) are exempt. But anything you hand the customer to take home — supplements, skincare — is taxable tangible property unless it's a prescription drug for human use.

The dietary-supplement and "no prescription" traps

Two things commonly flip an item to taxable. (1) Dietary supplements are excluded from "drug," so therapeutic-grade vitamins/nutraceuticals are taxable even when sold in a clinical setting — note the contrast with IV nutrients, which escaped "supplement" status precisely because they're infused, not ingested, and aren't labeled as supplements. (2) No prescription, no drug exemption: the same kind of treatment can be exempt or taxable depending on whether it's dispensed under a prescription (medium-to-deep peels are exempt; superficial, no-prescription peels are not).

Equipment charges and memberships

When a procedure's bill separately itemizes the machine the provider uses on you (here, the hydrafacial device), Tennessee applies the true-object test: because you must pay for the provider's equipment to get the service and the charge has no value to you apart from the service, the true object is the (non-taxable) service — it isn't a taxable equipment rental. The provider instead owes sales or use tax on those items when it buys them. And discount memberships are non-taxable: they sell an intangible right to buy at lower prices, not goods.

Accountants and advisors

The drug/oxygen exemption is § 67-6-320, built on the definitions of "drug" (§ 67-6-102(35)), "prescription" (§ 67-6-102(75)), and "dietary supplements" (§ 67-6-102(28)); TPP is defined at § 67-6-102(97)(A). Disposable IV-administration supplies are exempt under § 67-6-314(8). For services, Tennessee taxes only enumerated services (Ryder Truck Rental); intangible rights aren't taxable (Barnes & Noble); and note the amusement-tax angle the Department distinguished for prescription-based light therapy (P & P Enters. v. Celauro).

Common questions

Q: Are med-spa services taxable in Tennessee?
A: Generally no. Tennessee taxes only specifically enumerated services, and procedures like hydrafacials, PRP hair restoration, cryolipolysis, red-light therapy, and blood work aren't on the list — so they're non-taxable. The taxable items tend to be the products you sell, not the procedures you perform.

Q: Why is IV nutrition therapy exempt but nutraceutical vitamins taxable?
A: The IV nutrients are a compounded drug dispensed under a prescription, and they aren't a "dietary supplement" because they're infused intravenously rather than ingested. Nutraceuticals are dietary supplements, which the statute excludes from the definition of "drug," so they're taxable tangible property.

Q: A peel is a peel — why is one exempt and one taxable?
A: The drug exemption requires a prescription. The chemical solution in medium-to-deep peels is dispensed under a prescription, so it's exempt. Superficial peels here don't require a prescription, so they don't qualify.

Q: The bill itemizes the device the provider used on me — is that a taxable rental?
A: No. Under Tennessee's true-object test, because you must pay for the provider's equipment to receive the service and the charge has no value to you apart from the service, the true object is the service. The provider pays sales or use tax on that equipment when it buys it.

Q: Can my business rely on this ruling?
A: No. A Tennessee letter ruling binds the Department only as to the taxpayer it was issued to and cannot be relied on by anyone else; it can be revoked or modified. Use it to understand the Department's reasoning, then confirm your own facts.

Citations and references

Statutes (Tennessee Code Annotated):
- § 67-6-320 — exemption for drugs (including OTC drugs) and medical oxygen for human use dispensed pursuant to a prescription
- § 67-6-102(35) — definition of "drug"
- § 67-6-102(75) — broad definition of "prescription"
- § 67-6-102(28) — definition of "dietary supplements" (excluded from "drug")
- § 67-6-102(97)(A) — definition of "tangible personal property"
- § 67-6-314(8) — exemption for disposable medical supplies dispensed pursuant to a prescription for IV administration of a prescription drug
- §§ 67-6-101 to -907 — Tennessee Retailers' Sales Tax Act

Cases:
- Ryder Truck Rental, Inc. v. Huddleston, 1994 WL 420911 (Tenn. Ct. App. Aug. 12, 1994) — sales tax applies only to specifically enumerated services
- P & P Enters., Inc. v. Celauro, 733 S.W.2d 878 (Tenn. 1987) — tanning bed operation subject to amusement tax (distinguished for prescription-based light therapy)
- Barnes & Noble Superstores, Inc. v. Huddleston, 1996 WL 596955 (Tenn. Ct. App. Oct. 18, 1996) — sale of an intangible right is generally not taxable

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/26-03.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING # 26-03

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
Applicability of Tennessee sales and use tax to various healthcare related 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

1

[REDACTED] (the “Taxpayer”) is a [REDACTED] for [REDACTED], a [REDACTED] based in [REDACTED].
The products and services provided by the Taxpayer are described below. All the products and
services provided by the Taxpayer are for human use. The services provided by the Taxpayer are
performed or managed by physicians. The skincare products, hydrafacials, and nutraceuticals
provided by the Taxpayer do not require a prescription. The other treatments require a prescription.

IV Nutrition Therapy (intravenous therapy)
The IV nutrition therapy item delivers a blend of vitamins, minerals, amino acids, and other nutrients
into a customer’s veins pursuant to a prescription. This item includes the use of IV fluid, syringe, fluid
bag, and a needle. The nutrient labels include the pharmacy name, product name, dosage amount,
ingredients, and administration and storage instructions. The labels also state “This is a compounded
drug,” “For Office Use Only,” “Not For Resale,” and “Rx Only,” The labels provide an FDA website and
telephone number for reporting adverse events. The labels do not contain dietary supplement
labeling.
Injectable Neurotoxins (examples: Botox, [REDACTED])
These are injectable solutions that temporarily block nerve receptors in the muscle to prevent lines
and wrinkles. This item includes the use of an injectable solution (such as Botox) injected into a
customer with a small needle pursuant to a prescription.
Injectable Dermal Fillers (aesthetic treatments such as [REDACTED])
These are gel-like substances that are injected, pursuant to a prescription, beneath the skin to restore
lost volume, smooth lines and soften creases, or enhance facial contours. This item includes the use
of injectable solution and a small needle.
Hydrafacial (facial)
This is a noninvasive process used to remove dead skin cells and impurities, while simultaneously
delivering moisturizing serums into the skin. The process improves skin health and texture. The skin
is cleansed, exfoliated, and infused with serum. This item includes the use of a hydrafacial machine
and hydrafacial serums. The use of the hydrafacial machine and serums are separately itemized on
the invoice. A prescription is not required or obtained.
Skin Peels
This is a chemical solution applied to the skin for resurfacing. The chemical solution removes the top
layers of skin. The skin that grows back is smoother than before. This item includes the use of a skin
peel solution. While a superficial peel can be administered without a prescription, the medium-todeep peels require a prescription and medical oversight.
Hair Restoration
This involves taking plasma from a customer’s blood and injecting it into his or her scalp to stimulate
hair growth. This item includes the use of a centrifuge machine, blood collection tubes, syringes, and
needles, and it is administered pursuant to a prescription.

2

Cryolipolysis (example: [REDACTED] body contouring by [REDACTED])
This is a noninvasive body sculpting method that freezes a customer’s fat in localized areas. This item
includes the use of [REDACTED] and a [REDACTED]. It is administered under the supervision or
direction of a licensed medical provider following a consultation and treatment plan, and issuance of
patient-specific medical order or prescription for the service.
Nutraceuticals (therapeutic grade vitamins)
These are dietary vitamin supplements that are sold in powder, pill, and capsule form. These
supplements do not require a prescription.
Hyperbaric Chamber (oxygen therapy)
Hyperbaric oxygen therapy is a technique through which 100% oxygen is provided at a pressure
higher than 1 atm absolute (ATA). It is an established treatment modality for multiple conditions.
Customers seek this treatment because of its noninvasive nature, favorable safety profile, and
common clinical applications. This product includes the use of a hyperbaric chamber. This is
administered pursuant to a prescription or medical order for therapeutic sessions, particularly for
specific medical conditions.
Red Light Bed (LED light bed therapy)
This is a treatment involving a bed or a face panel and a specialized light. Customers are exposed to
the specialized light during this therapy. Red light therapy is typically considered a non-invasive
cosmetic treatment and does not require a prescription. However, red light therapy, as used here, is
a part of a medical treatment plan—such as for chronic pain, wound healing, or mood disorders—and
administered by licensed healthcare professionals pursuant to a prescription.
Blood Work
This is a blood test, issued pursuant to a prescription or medical order, that is a common method for
testing hormone levels in customers. It can detect testosterone, estrogen, cortisol, and thyroid levels.
This item uses a tourniquet, a needle, and a vial.
Skincare Products
This includes a range of medical-grade [REDACTED] products. This product line contains products that
have been tested and are backed with clinical studies proving their effectiveness. These products do
not require a prescription.
Memberships
The Taxpayer’s patients have the option to pay a recurring, monthly, tiered membership fee. Patients
are not required to become members to obtain the services that the Taxpayer offers. If a patient
comes to the Taxpayer but declines to become a member, the patient may still receive the same
services as a member would receive; the only distinction is that nonmembers do not receive pricing
discounts, which is the sole benefit of becoming a member.

3

RULINGS
Which of the Taxpayer’s products are subject to Tennessee sales and use tax when sold to the
Taxpayer’s customers?
Ruling: See Chart below.

ANALYSIS
Under the Retailer’s Sales Tax Act, retail sales in Tennessee of tangible personal property and
specifically enumerated services are subject to the sales tax, unless an exemption applies. 1 “Tangible
personal property” means “personal property that can be seen, weighed, measured, felt, or touched,
or that is in any other manner perceptible to the senses.” 2 The sales tax does not apply to all services;
rather, it applies only to services specifically enumerated by the statute. 3
TENN. CODE ANN. § 67-6-320 (2022) provides an exemption from sales and use tax for any drug,
including over-the-counter drugs, and medical oxygen for human use dispensed pursuant to a
prescription. A “prescription” is broadly defined for sales and use tax purposes under TENN. CODE ANN.
§ 67-6-102(75) (Supp. 2023) as “an order, formula or recipe issued in any form or oral, written,
electronic, or other means of transmission by a duly licensed practitioner authorized by the laws of
this state.” A “drug” is defined under TENN. CODE ANN. § 67-6-102(35) as:
a compound, substance or preparation, and any component of a compound,
substance or preparation, other than food and food ingredients, dietary supplements
or alcoholic beverages:
(A)
Recognized in the official United States Pharmacopoeia, official Homeopathic
Pharmacopoeia of the United States, or official National Formulary, and supplement
to any of them;
(B)
Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of
disease; or
(C)
Intended to affect the structure or any function of the body.
Accordingly, any product that qualifies as a drug, is used for humans, and is dispensed pursuant to a
prescription will qualify as exempt from the Tennessee sales and use tax. 4
A “drug” does not include “food and food ingredients,” which are “substances, whether in liquid,
concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by
humans and are consumed for their taste or nutritional value.” A “drug” and “food and food
ingredients” do not include “dietary supplements,” which are “any product, other than tobacco,
intended to supplement the diet that” (1) contains one or more specified dietary ingredients, including

Tennessee Retailer’s Sales Tax Act, Ch 3, §§ 1-18, 1947 Tenn. Pub. Acts Ch. 22, §§ 2254 (codified as amended at TENN. CODE ANN.
§§ 67-6-101 to -907 (2022 & Supp. 2023).

1

2

TENN. CODE ANN. § 67-6-102(97)(A) (Supp. 2023).

3

Ryder Truck Rental, Inc. v. Huddleston, 1994 WL 420911 (Tenn. Ct. App. Aug. 12, 1994).

4

TENN. CODE ANN. § 67-6-320 (2022).

4

a vitamin, a mineral, and an amino acid; (2) is “intended for ingestion in tablet, capsule, powder,
softgel, gelcap, or liquid form, or if not intended for ingestion in such a form, is not represented as
conventional food and is not represented for use as a sole item of a meal or of the diet; or prepared
food;” and (3) is “required to be labeled as a dietary supplement, identifiable by the supplement facts
box found on the label and as required pursuant to 21 CFR 101.36.” 5

Item

Sales and Use Tax treatment

Reason

IV Nutrition Therapy

Exempt

Injectable Neurotoxins

Exempt

Injectable Dermal Fillers

Exempt

Hydrafacial

Non-taxable

Exempt if for human use and
dispensed pursuant to a
prescription
Exempt if for human use and
dispensed pursuant to a
prescription
Exempt if for human use and
dispensed pursuant to a
prescription
Not a taxable service

Skin Peels

Exempt

Hair Restoration

Non-taxable

Cryolipolysis

Non-taxable

Nutraceuticals

Taxable

Hyperbaric Chamber

Exempt

Red Light Bed Therapy

Non-taxable

Blood Work

Non-taxable

Skincare Products

Taxable

Memberships

Non-taxable

Exempt if for human use and
dispensed pursuant to a
prescription
Not tangible personal property
or taxable service
Not tangible personal property
or taxable service
Taxable
tangible
personal
property. Dietary supplements
are not drugs.
Exempt if for human use and
dispensed pursuant to a
prescription
Not tangible personal property
or taxable service
Not tangible personal property
or taxable service
Taxable
tangible
personal
property. These products are
sold to customers without a
prescription.
Not tangible personal property
or taxable service

IV Nutrition Therapy (intravenous therapy)
5

TENN. CODE ANN. § 67-6-102(28) (Supp. 2023).

5

The IV nutrition therapy is exempt from sales and use tax if it is a drug for human use that is dispensed
pursuant to a prescription. The nutrition is taxable if it is a dietary supplement.
The IV nutrients are not dietary supplements, which are specifically excluded from the definition of
“drug” for purposes of the exemption. Although the nutrients satisfy he first requirement of a dietary
supplement because they contain vitamins, minerals, and amino acids, 6 the nutrients are intended
for intravenous administration, rather than ingestion in tablet, capsule, powder, softgel, gelcap, or
liquid form, or any other form. 7 And the nutrients are not “required to be labeled as a dietary
supplement, identifiable by the supplement facts box found on the label and as required pursuant to
21 CFR 101.36.” 8 The labeling requirements of 21 C.F.R. § 101.36 apply only to items that meet the
definition of dietary supplement under federal law. Like Tennessee’s definition, the federal definition
of dietary supplement requires that the item is intended for ingestion in tablet, capsule, powder,
softgel, gelcap, or liquid form, or if not intended for ingestion in such a form, is not represented as
conventional food and is not represented for use as a sole item of a meal or of the diet. 9 Thus, an item
can qualify as a dietary supplement even if it is intended for ingestion in the same form as a
conventional food category, such as teas or bars, so long as it is not represented as conventional food
or as a sole item of a meal or of the diet. 10 Because the IV nutrients are not intended for ingestion,
they are not a dietary supplement and are not subject to the labeling requirements of 21 C.F.R. §
101.36.
The IV nutrients qualify as drugs because they are a compound, substance, or preparation intended
to affect the function of the body. They qualify as exempt drugs because they are intended for human
use and dispensed pursuant to a prescription. Specifically, the IV nutrients are compounded drugs
under federal law. “Compounding is generally a practice in which a licensed pharmacist, a licensed
physician or, in the case of an outsourcing facility, a person under the supervision of a licensed
pharmacist, combines, mixes or alters ingredients of a drug to create a medication tailored to the
needs of an individual patient.” 11 21 U.S.C.A. § 503b requires drugs compounded at an outsourcing
facility to have labels that include “This is a compounded drug,” “Not for Resale,” and “Office Use
Only,” 12 which the labeling on the drugs used in the IV nutrition therapy include.
For the foregoing reasons, the IV therapy is exempt from sales and use tax under Tenn. Code Ann. §
67-6-320 as a drug for human use that is dispensed pursuant to a prescription. The therapy is not
taxable as a dietary supplement because it is intended for intravenous administration rather than
ingestion.
The nutrition therapy requires the use of syringes, fluid bags, and needles. Disposable medical
supplies such as these will be exempt from sales and use tax if they are dispensed pursuant to a
prescription; used in the treatment of a human outside a hospital, skilled nursing facility, or

6

TENN. CODE ANN. § 67-6-102(28)(A) (Supp. 2023).

7

TENN. CODE ANN. § 67-6-102(28)(B).

8

TENN. CODE ANN. § 67-6-102(28)(C) (Supp. 2023).

9

21 U.S.C.A. § 321(ff)(2); 21 U.S.C.A. § 350(c)(1)(B).

10

See Questions and Answers on Dietary Supplements, (last accessed May 4, 2026).

11

Human Drug Compounding, (last accessed May 4, 2026).

12

21 U.S.C.A. § 353b(a)(10).

6

ambulatory surgical treatment center; used for the intravenous administration of a prescription drug;
and come into direct contact with the prescription drug. 13
Injectable Neurotoxins (examples: Botox, [REDACTED])
This product is exempt from sales and use tax because it qualifies as a drug for human use that is
dispensed pursuant to a prescription. The injectable neurotoxins qualify as drugs because they are
compounds, substances or preparations that are intended to affect the function of the body by
blocking nerve receptors. The product qualifies as being dispensed pursuant to a prescription when
it is dispensed by a licensed practitioner or at the direction of a licensed practitioner.
Injectable Dermal Fillers (aesthetic treatments such as [REDACTED])
The application of Tennessee sales and use tax to the sale of dermal fillers has previously been
examined in Tenn. Dept. Rev. Ltr. Rul. #11-27 (June 6, 2011), which ruled that dermal fillers were
exempt from sales and use tax because they qualify as drugs for human use that are dispensed
pursuant to a prescription. In this ruling, the same conclusion is reached. The dermal fillers are
compounds, substances or preparations that are intended to affect the structure of the body by
affecting the skin, restoring lost volume, smoothing lines and softening creases, or enhancing facial
contours.
Hydrafacial (facial)
This item involves a non-taxable service. A licensed aesthetician or medical professional uses a
specialized device to cleanse, exfoliate, extract impurities, and infuse the skin with hydrating serums
in a multi-step facial treatment. The treatment uses cleansers, exfoliants, acids (e.g., glycolic, salicylic),
hydrating serums, boosters, and disposable tips/cartridges, and the hydrafacial machine. The use of
the hydrafacial machine is separately itemized on the customer’s bill, but it is used by the provider at
all times. In Tennessee, the true object test is used to determine if a service provider is leasing or
renting equipment to its customers in addition to providing a taxable service. Here, the issue is
whether the charge for the equipment by the service provider is classified as rental of tangible
personal property. In this example, the taxable service and equipment are separately itemized on the
customer’s invoice. However, here, the customer must pay for the service provider’s equipment to
receive the service. In other words, the service provider is not in the business of renting hydrafacial
machines for general use by the public. Instead, the charge for the hydrafacial machine in the hands
of the customer is without value except in connection with the service. Accordingly, the true object is
the performance of the hydrafacial service, which is non-taxable because it is not a specifically
enumerated service.
Likewise, the hydrafacial serums, cleansers, exfoliants, acids, etc., applied by the provider during the
hydrafacial are used by the provider in the provision of its service. Although separately itemized on
the receipt, the Taxpayer would not collect sales tax on these items, but instead would be required to
pay sales or use tax on the items when purchased.
Skin Peels

13

TENN. CODE ANN. § 67-6-314(8).

7

Skin peels involve a chemical solution 14 applied to the skin to remove the top layer. The chemical
solution qualifies as a drug because it is a compound, substance, or preparation intended to affect
the structure of the body—specifically, the skin. The chemical solution in the taxpayer’s medium-todeep skin peels is an exempt drug because it is intended for human use and dispensed pursuant to a
prescription. The taxpayer’s superficial peels do not require a prescription and thus do not qualify for
exemption under TENN. CODE ANN. § 67-6-320.
Hair Restoration
This item is a non-taxable service. Taking plasma from a customer’s blood and injecting it into the
customer’s scalp to stimulate hair growth is not an enumerated taxable service.
Cryolipolysis (example: [REDACTED] body contouring by [REDACTED])
This item involves freezing a person’s body fat, which is not an enumerated taxable service.
Nutraceuticals (therapeutic grade vitamins)
The nutraceuticals are tangible personal property that is subject to sales and use tax. The prescription
drug exemption does not apply because these are dietary supplements, which are specifically
excluded from the definition of “drug” found at TENN. CODE ANN. § 67-6-102(35).
Hyperbaric Chamber (oxygen therapy)
The hyperbaric chamber is used to deliver oxygen therapy to a customer. So long as the oxygen is for
human use and dispensed under the direction and management of a licensed practitioner, the oxygen
therapy is exempt from sales and use tax.
Red Light Bed (LED light bed therapy)
Exposing customers to a specialized light is non-taxable because it is not an enumerated taxable
service. Further, since these are issued pursuant to a prescription, the customer is not obtaining the
treatment for amusement. 15
Blood Work
Blood testing is non-taxable because drawing and testing blood is not an enumerated taxable service.
Skin Care Products

According to the FDA, many chemical skin peel products contain ingredients such as trichloroacetic acid, glycolic acid, salicylic
acid, and lactic acid in varying concentrations that are too high to be used safely at home without supervision by a dermatologist
or other licensed and trained practitioner. See FDA warns against purchasing or using chemical peel skin products without
professional supervision, (last accessed May 4, 2026). The FDA considers products with such high concentrations of these
ingredients to be unapproved drugs that cannot be sold as over-the-counter cosmetics and has issued warnings to that effect
to retailers. (last accessed May 4, 2026).
14

Cf. P & P Enters., Inc. v. Celauro, 733 S.W.2d 878, 878 (Tenn. 1987), where the Tennessee Supreme Court found a
tanning bed operation was subject to the amusement tax because it was a similar facility or business to a health spa or club.
15

8

The skin care products are tangible personal property. Although they are clinically tested, medical
grade products, they are not sold pursuant to a prescription and are therefore not exempt as
prescription drugs. Accordingly, they are subject to sales tax when sold to customers.

Memberships
The memberships are not subject to sales and use tax. According to the Taxpayer, the sole benefit of
membership is that members receive discounted pricing for the Taxpayer’s services, which are
available to nonmembers at full price. The sale of an intangible right, even if embodied in tangible
personal property, is generally not subject to Tennessee sales and use tax. 16 Memberships that
provide a discount are providing members with an intangible right to purchase items at discounted
rates, and such intangible right is not subject to sales and use tax. Accordingly, the memberships are
not subject to Tennessee sales and use tax.

APPROVED:

David Gerregano
Commissioner of Revenue

DATE:

May 5, 2026

16
See generally Barnes & Noble Superstores, Inc. v. Huddleston, No. 01A01-9604-CH-00149, 1996 WL 596955, at *2 (Tenn. Ct. App.
Oct. 18, 1996).

9