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Tennessee Department of Revenue: access and use of software subject to sales and use tax, department says
Summary
The Tennessee Department of Revenue told a December webinar that access to and use of computer software — including downloads and cloud/SaaS — is subject to Tennessee sales and use tax; sourcing depends on where users access the software.
The Tennessee Department of Revenue told attendees on Dec. 2023 during a Taxpayer Education webinar that access and use of computer software in Tennessee is subject to sales and use tax regardless of how the software is delivered or billed. "Access and use of computer software in Tennessee is subject to sales and use tax regardless of a customer's chosen method," said Katie Julian, the webinar presenter from the department's Taxpayer Education Section.
Julian cited Tennessee Code Annotated §67-6-231 as the statutory framework and walked through how prewritten (off‑the‑shelf) and custom software are classified for tax purposes. She said that prewritten software is generally treated as a taxable sale while custom software is treated as a service for sales‑tax purposes in Tennessee.
The department advised that taxability turns on definitions and facts: how the software is delivered (download, electronic delivery, disk, or load‑and‑leave) may be less important than ownership, the nature of the product, and whether services are necessary to complete the sale. The department repeatedly urged businesses to consult the Sales and Use Tax Manual (chapter on computer software) and the linked Important Notices for detailed guidance.
The webinar concluded with a reminder that multistate sellers should check nexus and apportionment rules; the department provided email and helpline contacts for case‑specific assistance.
