Computer software is a general term used to describe a collection of computer programs, procedures and documentation that perform some tasks on a computer system. Software is considered personal property and may be assigned.
Computer software is a general term used to describe a collection of computer programs, procedures and documentation that perform some tasks on a computer system. Software is considered personal property and may be assigned.
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Specified digital products are sold to customers by electronic transfer which includes downloading, podcasting, streaming, and accessing online. Examples of digital audio-visual works include: motion pictures, musical videos, news and entertainment programs, and live events.
In Tennessee, services that are generally not subjected to either sales or use taxes include data processing, information services, and management consulting services. Businesses that offer management consulting or management services are required to pay a local gross receipts tax.
Consulting and testing services in Tennessee are typically not taxable, while the sale or licensing of computer software and hardware and any related installation services are taxable. If any of the non-taxable services are needed for the taxable good that is sold, the non-taxable services are then subject to taxation.
Software is commonly licensed under agreements that include taxable and nontaxable services. License agreements constitute a lease of tangible personal property under Tennessee law and the payments made pursuant to the license agreements are subject to sales and use tax.
Some goods are exempt from sales tax under Tennessee law. Examples include some industrial machinery, agricultural equipment, fuel, and medical supplies.
Custom software delivered electronically is NOT taxable, while prewritten computer software delivered electronically is taxable. Note: Prewritten software delivered electronically to a business is exempt under certain conditions.
Sales tax applies to the retail sales of hardware, miscellaneous supplies, repair parts, and pre-written and sub-licensed software. Sales tax also applies if the client is required to purchase a maintenance contract or the hotline support service.
Yes, digital products in Tennessee are subject to the state sales tax of 7.00% and a standard local tax rate of 2.5% versus the actual local tax rate of the county.