Sales Tax State Activity Update - February 2009

Tennessee Steps Inline with Digital Downloads

As part of a larger effort to implement a streamlined sales tax, Tennessee has opted to institute a digital download tax that would make Tennessee’s tax law similar to that in other states. As a result, The Tennessee Department of Revenue has decided to enact various tax law changes which the Governor signed on June 5, 2008. One of which included expanding its sales tax of digital goods to include downloaded music, movies, books. Digital Goods, however, have been subject to sales tax according to section 67-6-202 which states:

"The retail sale, lease, licensing, or use of specified digital products transferred to or accessed by subscribers or consumers in this state shall be subject to the tax levied by this chapter on the sales price or purchase price thereof at a rate equal to the rate of tax levied on the sale of tangible personal property at retail.”

As a result, the Tennessee Department issued a reminder in their Revenue Review 2009 pamphlet that digital goods are deemed taxable. Reporting will be reflected in a separate line item which becomes effective with the January 1, 2009 Sales tax Use Tax return.

The Revenue review can be viewed at the Tennessee Department of Revenue.

(Revenue Review, Tennessee Department of Revenue, January 2009)

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