True object test

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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…

The California Court of Appeal for the Third Appellate District held that the purchase of “discounted” cell phones bundled together with wireless services requires payment of sales tax based on the cell phone’s full price.

Plaintiffs purchased cell phones at a reduced cost, together with wireless services, in a “bundled transaction.” The bundled transaction included…

On March 15, 2022, the Ohio Supreme Court determined that the Ohio Board of Tax Appeals (BTA) must apply the true object test when determining whether a bank purchased nontaxable custom software or taxable services. The taxpayer was a bank that purchased computerized services which allowed the bank to run transactions on a daily basis…

The Colorado Department of Revenue has determined that an information technology provider’s sale of its backup service, which allowed its customers to back up business applications, files, and systems, and also included the delivery of computer servers to customers’ locations, constituted a nontaxable service.  Although the Department “considered whether the placement of [the] servers constitut[ed]…