Shaking things up in state and local tax
Shaking things up in state and local tax
By Evan Hamme and Madison Barnett
The Tennessee Department of Revenue determined that computer-related services provided on an hourly basis by an IT staffing agency are subject to sales tax in certain instances. Under Tennessee law, the sale of computer software is subject to sales tax, including when the software is created on a customer’s…
By Evan Hamme and Madison Barnett
Applying the “true object” test to software-related services, the Tennessee Department of Revenue determined in a letter ruling that optional services offered in connection with the sale of software would not be subject to sales tax, at least in some circumstances. The taxpayer in this case sells – and…
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By Stephen Burroughs and Andrew Appleby
The Tennessee Court of Appeals held that the Commissioner had the authority to require Vodafone, a wireless communications provider, to use an alternative apportionment method for Tennessee franchise and excise tax purposes. Vodafone used Tennessee’s statutory cost-of-performance (COP) method to source its telecommunication service receipts. Using Tennessee’s statutory COP…
Tennessee ruled that the temporary download of software for demonstration purposes and immediate removal does not constitute an installation of computer software that is subject to sales tax. View the full ruling here.
By Jessica Kerner and Timothy Gustafson
The Tennessee Department of Revenue determined in a Letter Ruling that a taxpayer’s sale of remote storage services and virtual computing services are not subject to Tennessee sales or use tax where the data centers and servers used to provide such services are located outside the state. The…
By Mary Alexander and Andrew Appleby
The Tennessee Court of Appeals held a wide area network (WAN) service provided by IBM was not taxable because the true object of the service was not a “telecommunications service.” IBM’s WAN service was a technological infrastructure that enabled remote access to information by linking geographically separated computers. The…
By Shane Lord and Timothy Gustafson
The Tennessee Court of Appeals held that a taxpayer’s wholesale service of converting end-user information into Internet protocol was an “enhanced” service for which the true object or primary purpose was to provide the non-taxable service of “Internet access” and not the taxable service of “telecommunications.” Adopting definitions set forth…
By Madison Barnett and Timothy Gustafson
The Tennessee Department of Revenue announced that the existing opportunity to compromise prior year liabilities related to the disallowance of certain intangible expense deductions will be closing on September 30, 2013. For several years, Tennessee has been issuing wide-scale assessments—using the Department’s discretionary authority—to taxpayers that deducted intangible expenses…
The Tennessee Department of Revenue released two taxpayer-favorable rulings related to the intangible expense addback statute and economic nexus on January 8, 2013. In Letter Ruling No. 12-32 (Dec. 19, 2012), the Department ruled that the discount incurred in the course of factoring trade receivables using an affiliated factoring company did not constitute an “intangible…
