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Tennessee Revenue Modernization Act - Remotely Accessed Software

01/16/2017  |  By: Brian McCuller, JD, CPA, Shareholder, Practice Leader Tax

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An important provision of the Act that went into effect in 2015 makes remotely accessed software subject to Tennessee’s sales and use tax in an effort to address a perceived shortfall in the law.

Previously, sales tax was levied only if you purchased software at a store or downloaded it over the internet. Software wasn’t taxed if you purchased the software or subscription and used it over the internet. This new approach recognizes the huge growth in cloud-based software offerings.

This software is remotely hosted and is usually accessed through a web browser. This change brings the tax code in line with the reality that people are accessing software remotely much more than downloading it, which had been eliminating the payment of a sales tax.

The law confirms that certain software-related services, such as data processing and billing and collection services, remain exempt from the tax.

Download the Tennessee State Tax Planning Guide