Does a company that sells automotive window information labels to car dealers have to charge Tennessee sales tax on them?

Plain-English summary

A company sells the information labels that go in a car's rear window — the stickers showing warranty terms, fuel-economy figures, and other vehicle information, some of it required by law. It sells those labels to auto dealers, who either leave the label on when the car is sold or peel it off and discard it. The company asked Tennessee whether it must charge sales tax on the labels.

The Department said no — the labels are exempt. A label is tangible personal property, so it would normally be taxable. But Tennessee has a packaging exemption that expressly covers "materials, containers, labels, sacks, bags or bottles used for packaging tangible personal property" when that property is either sold to consumers or when the use is incidental to a sale for resale. A window sticker fits the ordinary meaning of a "label" (printed matter affixed to something to furnish identification or other information), and it is attached to a car that is sold to consumers. The Department added a useful point: the exemption does not require an actual container, bag, or sack — a bare label still qualifies.

What this means for you

Sellers of labels, tags, and packaging materials

If you sell labels (or other packaging materials) that end up on or around tangible goods sold to consumers, Tennessee's packaging exemption may take your sale out of tax — even when there's no box, bag, or bottle involved. The label here qualified simply because it is a "label" affixed to property sold to consumers. Keep documentation of how your product is used so you can show it falls within § 67-6-329(13).

Auto dealers and others who buy these labels

If your vendor properly treats these labels as exempt packaging materials, you shouldn't be charged sales tax on them. (This ruling addresses the vendor's sale of the labels; it doesn't change how the underlying vehicles are taxed.)

Remember what a "revenue ruling" is

This is a revenue ruling, which in Tennessee is advisory only and not binding on the Department at all — unlike a letter ruling, which at least binds the Department as to the one taxpayer it was issued to. Treat it as a window into the Department's reasoning, not as something anyone can rely on.

Common questions

Q: Aren't labels taxable as tangible personal property?
A: By default, yes. But Tennessee's packaging exemption (§ 67-6-329(13)) specifically lists "labels," so labels used for packaging tangible personal property sold to consumers (or incidentally to a sale for resale) are exempt.

Q: There's no box or bag — does the exemption still apply?
A: Yes. The Department held that the absence of a container, bag, or sack does not defeat the exemption; a label by itself still qualifies.

Q: Can my business rely on this ruling?
A: No. A Tennessee revenue ruling is advisory and not binding on the Department, and no taxpayer can rely on it as binding. It shows how the Department reasons; confirm your own facts and the current statute.

Citations and references

Statutes (Tennessee Code Annotated):
- § 67-6-329(13) — exempts materials, containers, labels, sacks, bags or bottles used for packaging tangible personal property sold to consumers, or incidental to a sale for resale
- § 67-6-102(97)(A) — definition of "tangible personal property"
- §§ 67-6-101 to -907 — Tennessee Retailers' Sales Tax Act

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/24-02.pdf

Original ruling text

Revenue rulings are not binding on the Department. 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 window labels sold to auto dealers.

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.

The Taxpayer sells information labels to auto dealers. The label is placed in the car in one of the rear
windows and shows various information, sometimes as required by law. The information includes the
warranty, if any, fuel economy figures, and other information related to the vehicle.
The label is either sold with the car or removed by the dealer and discarded according to customer
preference.

1.

Is the Taxpayer’s sale of the label to car dealers subject to Tennessee sales and use tax?
Ruling: No. The label is exempt.

Under the Retailer’s Sales Tax Act,1 the retail sale in Tennessee of tangible personal property is subject
to sales and use tax, unless an exemption applies. TENN. CODE ANN. § 67-6-102(97)(A) (Supp. 2023)
defines “tangible personal property” as property that can be seen, weighed, measured, felt, or
touched, or that is in any other manner perceptible to the senses. The label sold by the Taxpayer
meets the definition of tangible personal property and will be subject to sales and use tax unless an
exemption applies.

Tennessee Retailer’s Sales Tax Act, ch.3, §§ 1-18, 1947 Tenn. Pub. Act Ch. 22-54 (codified as amended at TENN. CODE ANN. §§ 676-101 to -907 (2022 and Supp. 2023).
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Tenn. Code Ann. § 67-6-329(13) (Supp. 2023) provides an exemption from Tennessee sales and use
tax for “[m]aterials, containers, labels, sacks, bags or bottles used for packaging tangible personal
property when the property is either sold in the containers, sacks, bags or bottles directly to
consumers, or when such use is incidental to the sale of the property for resale.”
The statute expressly exempts “labels” used for packaging. Merriam-Webster defines a “label” as “a
slip (as of paper or cloth) inscribed and affixed to something for identification or description” or
“written or printed matter accompanying an article to furnish identification or other information”.2
The stickers at issue clearly meet this definition and are attached to tangible personal property sold
to consumers. Under these facts, the absence of a container, bag, or sack does not defeat the
exemption under TENN. CODE ANN. § 67-6-329(13). As such, the label is exempt from Tennessee sales
and use tax.

APPROVED:

David Gerregano
Commissioner of Revenue

DATE:

March 20, 2024

Merriam-Webster, Incorporated, Label, MERRIAM-WEBSTER.COM (2024), https://www.merriamwebster.com/dictionary/label (last
visited March 18, 2024).
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