Is calibrating a fuel meter a taxable repair service in Tennessee, and does it matter whether the meter is permanently attached to real property?

Plain-English summary

A company calibrates fuel meters -- the devices that measure fuel transferred between fuel stations, terminals, and pumps -- to keep their readings accurate, which is required both for accurate buyer/seller transactions and to meet state weight-and-measurement regulations. The company uses its own equipment to measure and adjust each meter; the meter stays functional throughout, and no parts change hands.

The Department ruled that calibration is a taxable repair service under Tenn. Code Ann. § 67-6-205(c)(4) -- but only when the meter being calibrated is not affixed to real property. Two things had to be true for tax to apply:

1. The work has to be a "repair service." Calibration qualifies: it restores the meter to accurate, original-condition functioning after wear and normal use, and can also be seen as correcting a defect in measurement accuracy -- both squarely within Rule 54's definition of "repair services."
2. The work has to be performed on tangible personal property, not a fixture attached to realty. Fuel meters are ordinarily tangible personal property, so calibrating a free-standing or portable meter is taxable. But Tennessee's repair-services tax specifically excludes maintenance or repair work on "fixtures attached to and a part of any real property" (Rule 54(2)) -- so calibrating a meter that has become a fixture is not taxable.

The Department was careful to note it was not deciding which of the taxpayer's actual meters count as "affixed to realty" -- that turns on Tennessee's separate body of fixtures law, applied fact-by-fact to each installation (how firmly attached, whether it's intended to be permanent, etc.).

What this means for you

Fuel meter calibration and repair businesses

Your calibration charges are taxable when performed on a portable or free-standing meter, but not when performed on a meter that has become a fixture of the real property where it sits. Because "affixed to realty" is a fact-specific fixtures-law question (not something this ruling resolves for you), document how each meter is installed -- permanently mounted, hard-wired, difficult to remove -- since that record is what would support treating a job as non-taxable.

Businesses that repair or service other equipment that might be building fixtures

The same logic extends beyond fuel meters: Tennessee's repair-services tax reaches repairs to tangible personal property generally, but carves out repairs to items that have become fixtures attached to real property (buildings, wiring, plumbing, and similar). If your equipment could plausibly be a "fixture" depending on installation, the taxability of your repair work may turn on that same case-by-case fixtures analysis.

Accountants and tax professionals

Note this is a Revenue Ruling, not a Letter Ruling -- it's advisory and not binding on the Department even as to the taxpayer who requested it (unlike a Letter Ruling, which at least binds the Department as to that one taxpayer). Treat it as informative of the Department's reasoning, not as a guarantee.

Common questions

Q: Is calibrating a fuel meter always taxable in Tennessee?
A: No -- only when the meter is not affixed to real property. Calibration on a meter that has become a fixture of the realty is not a taxable repair service.

Q: How do I know if my fuel meter is "affixed to realty"?
A: This ruling doesn't decide that for any specific meter -- it depends on Tennessee's general law of fixtures, applied case by case to the facts of each installation.

Q: Does this reasoning apply to repairing other kinds of equipment, not just fuel meters?
A: The underlying rule -- that repair services are taxable on tangible personal property but not on fixtures attached to real property -- is a general Tennessee sales tax principle (Rule 54(2)), so the same fixtures analysis could apply to other equipment.

Q: Can I rely on this Revenue Ruling for my own business?
A: Not as binding authority. Tennessee Revenue Rulings are explicitly advisory and NOT binding on the Department, even for the taxpayer who requested it. It shows the Department's reasoning, but you should confirm your own situation with a tax professional.

Citations and references

Tennessee statutes and rules (Tenn. Code Ann. unless noted):

• § 67-6-205(c)(4) (Supp. 2010) (sales tax on repair services to tangible personal property or computer software)
• § 67-6-102(92)(A) (Supp. 2010) (definition of "tangible personal property")
• Tenn. Comp. R. & Regs. 1320-5-1-.54 (2000) (Rule 54) (defines "repair services"/"repairs"; excludes maintenance or work on buildings, wiring, plumbing, or fixtures attached to real property)
• § 67-6-101 et seq. (Retailers' Sales Tax Act)

Tennessee cases cited by the ruling (fixtures-law background, not applied to a specific determination here):

• Hubbard v. Hardeman County Bank, 868 S.W.2d 656 (Tenn. Ct. App. 1993)
• Magnavox Consumer Electronics v. King, 707 S.W.2d 504 (Tenn. 1986)
• Harry J. Whelchel Company v. King, 610 S.W.2d 710 (Tenn. 1980)
• General Carpet Contractors, Inc. v. Tidwell, 511 S.W.2d 241 (Tenn. 1974)

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/11-31.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
REVENUE RULING # 11-31
WARNING
Revenue rulings are not binding on the Department. This presentation of the ruling in a
redacted form is information only. Rulings are made in response to particular facts
presented and are not intended necessarily as statements of Departmental policy.

SUBJECT
The application of the Tennessee sales and use tax to the calibration of fuel meters.
SCOPE
Revenue Rulings are statements regarding the substantive application of law and statements of
procedure that affect the rights and duties of taxpayers and other members of the public. Revenue
Rulings are advisory in nature and are not binding on the Department.
FACTS
The Taxpayer performs calibration services on fuel meters, which measure fuel being transferred
between fuel stations, terminals, pumps, and so on. Calibration is regularly required to ensure
that the amount of fuel transferred from the buyer to the seller is accurate and precise. In
addition, calibration ensures that delivery regulations and state weight and measurement
requirements are met. The calibration involves the use of a piece of equipment owned by the
Taxpayer to measure and adjust the meter so that it is accurate. At the time the Taxpayer
performs the service, the meter is functional, and no parts or materials are transferred to the
Taxpayer’s customer.
QUESTION
Are the Taxpayer’s calibration services subject to the Tennessee sales and use tax?

RULING
The Taxpayer’s calibration services are subject to the Tennessee sales and use tax when
performed on fuel meters that are not affixed to realty. However, the Taxpayer’s calibration
services are not subject to the Tennessee sales and use tax when performed on fuel meters that
are affixed to realty.
ANALYSIS
The Taxpayer’s calibration services, when performed on fuel meters that are not affixed to realty,
constitute repair services that are subject to the Tennessee sales and use tax under TENN. CODE
ANN. § 67-6-205(c)(4) (Supp. 2010). However, the Taxpayer’s calibration services are not
subject to the Tennessee sales and use tax when performed on fuel meters that are affixed to
realty.
Retail sales of tangible personal property and specifically enumerated services in Tennessee are
generally subject to the sales and use tax under the Retailers’ Sales Tax Act, TENN. CODE ANN.
§ 67-6-101 et seq.
Services subject to the Tennessee sales tax include the repair of certain tangible personal
property. Specifically, TENN. CODE ANN. § 67-6-205(c)(4) imposes the sales tax on the
“performing, for a consideration, of any repair services to any kind of tangible personal property
or computer software.” “Tangible personal property” is defined in pertinent part as “personal
property that can be seen, weighed, measured, felt, or touched, or that is in any manner
perceptible to the senses.” TENN. CODE ANN. § 67-6-102(92)(A) (Supp. 2010).
TENN. COMP. R. & REGS. 1320-5-1-.54 (2000) (“Rule 54”) further explains and clarifies TENN.
CODE ANN. § 67-6-205(c)(4). In particular, Rule 54(2) explains that the terms “repair services”
and “repairs” include the following, when provided to a user and consumer: work done to
preserve or restore tangible personal property to or near the original condition, made necessary
by wear, normal use, wastage, injury, decay, partial destruction, or dilapidation; mending,
correction, or adjustment made for any defect or defective portion; refinishing; and any cleaning
that is a necessary part of any repair work. However, Rule 54(2) further provides that “[r]epair
services and repairs of tangible personal property shall not include any maintenance or other
work on buildings, or electrical wiring, plumbing, or fixtures attached to and a part of any real
property.” (Emphasis added.)
Thus, for the Taxpayer’s calibration services to be subject to the Tennessee sales tax, the
following requirements must be met: 1) the work must constitute a repair service; and 2) the
work must be performed on tangible personal property that is not affixed to realty.
The first requirement is met. Calibration of a fuel meter constitutes work done to restore the
meter to its original functioning condition, made necessary by wear and normal use.
Additionally, calibration can be characterized as an adjustment made to the meter to correct a
defect in the accuracy of its measurements. The Taxpayer’s calibration services therefore
constitute a repair service for Tennessee sales tax purposes.

2

With respect to the second requirement, fuel meters constitute tangible personal property. Thus,
the second requirement is met in the case of fuel meters that are not affixed to realty.1 However,
in the case of fuel meters that are affixed to realty, the second requirement is not met.
Accordingly, the Taxpayer’s calibration services, when performed on fuel meters that are not
affixed to realty, constitute repair services that are subject to the Tennessee sales and use tax
under TENN. CODE ANN. § 67-6-205(c)(4). However, the Taxpayer’s calibration services are not
subject to the Tennessee sales and use tax when performed on fuel meters that are affixed to
realty.

Kristin Husat
Senior Tax Counsel

APPROVED:

Richard H. Roberts
Commissioner of Revenue

DATE:

7/12/11

1

This revenue ruling does not make a determination as to whether meters serviced by the Taxpayer constitute
tangible personal property affixed to realty. The determination of whether an item of tangible personal property
becomes part of realty depends upon the application of the law of fixtures to the particular factual circumstances.
See, e.g., Hubbard v. Hardeman County Bank, 868 S.W.2d 656, 660 (Tenn. Ct. App. 1993); Magnavox Consumer
Electronics v. King, 707 S.W.2d 504, 507 (Tenn. 1986); Harry J. Whelchel Company v. King, 610 S.W.2d 710, 713714 (Tenn. 1980); General Carpet Contractors, Inc. v. Tidwell, 511 S.W.2d 241 (Tenn. 1974). The determination as
to whether an individual meter is affixed to realty must therefore be made on a case-by-case basis, considering all of
the facts and circumstances of the particular situation.

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