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Tangible personal property, taxable services, amusements, and digital products specifically intended for resale are not subject to tax. Retail sales to the federal government or its agencies and the State of Tennessee or a county or municipality within Tennessee are not subject to tax.
In other words, Software-as-a-Service as a cloud-computing program that is only accessed remotely without delivery of a tangible media and does not include the user taking possession of the program is not subject to sales or use tax.
In Tennessee, SaaS and cloud computing are considered taxable as of July 1, 2015, as part of the Revenue Modernization Act. The act specifies that it applies to amounts charged for the remote access and use of software, which remains in the seller's possession, when the purchaser accesses the software within Tennessee.
Services in Tennessee are generally not taxable.
If you purchase goods in a state with a higher sales tax rate and pay the other state's sales tax, you would not owe any use tax in Tennessee on those goods.
Generally, the sales tax applies to the retail sale of tangible personal property and certain services such as lodging services, telecommunications services and installation and repair of tangible personal property.
As of May 2019, Tennessee is an origin-based state. This means you're responsible for applying the sales tax rate determined by the ship-from address on all taxable sales.
Services such as grass cutting, trimming, bush trimming, leaf raking, and similar activities are all services performed on real property. Charges for such services are not subject to sales tax.
The 11 origin-based states are: Arizona, California, Illinois, Mississippi, Missouri, New Mexico, Ohio, Pennsylvania, Tennessee, Texas, Utah and Virginia. California is mixed: City, county and state sales taxes are origin-based, while district sales taxes (supplementary local taxes) are destination-based.
Software distribution agreements specifically allow distributors to market and sell the developer's software to end users. A software distribution agreement sets forth the rights and duties of both the developer and the distributor to avoid disputes later on.