On October 24, 2025, the Tennessee Department of Revenue ruled that subscription fees for a mobile heart-health app were subject to sales and use tax. The taxpayer charged an annual flat per-user subscription fee to clients who make subscription offerings available as part of medical benefits to their employees and employees’ dependents. For the subscription fee, the taxpayer granted its clients (and the users) software licenses for access to the app, which tracked their blood pressure and activity.
Since 2015, remotely accessed computer software is subject to sales tax in Tennessee. However, sales tax does not apply to “information or data processing services,” nor subscriptions to data processing and information services, where the true object of the transaction is the processed data or information. Here, the Department ruled that the true object of the transaction was the sale of software rather than data processing services. The Department reasoned that tracking biometric data like blood pressure and other activity performed by the software in the app is not “data processing” because it was not converting raw data into a readable form that is processed by a computer. Thus, the Department found that the subscription fees were taxable.