SALT Report 1720 – The Tennessee Department of Revenue issued a Letter Ruling regarding fees charged by an out of state Taxpayer for access to resources on its website. The resources offered include library content, which allows the customer to access various databases, reference sources and periodicals and computer simulation programs. The Taxpayer’s customers are not required to download or install any hardware or software to access the information however; the customer can view, download, and print any of the information on the web site.
The Department determined the taxability as follows:
- The written materials provided online are taxable as specified digital products because they fall within the definition of “digital books” as defined in Tennessee code § 67-6-102(88)
- Access to the computer simulation programs is not taxable because the taxpayer offers the programs as an application service provider, the programs remain on the taxpayer’s servers located outside Tennessee, and the taxpayer retains complete control over the programs
- If the charges for taxable written materials are not separately stated from charges for nontaxable items then the entire charge will be subject to tax
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