Stay up to date with sales tax: Join our mailing list!

Representative Lamar Smith (Republican, Texas) has introduced a bill to bar multiple taxes on digital goods and services.  Smith had proposed an earlier bill which failed to pass.  This bill is a revised version of the earlier bill. The proposed bill – called the Digital Goods and Services Tax Fairness Act of 2013 – would only allow a state to tax sales of digital goods and services to customers with a tax address within that state. Additionally, states would be barred from imposing multiple taxes on digital goods. The bill defines digital goods as sounds, images, data and facts maintained in digital form. Internet access service is not included as a digital good in the bill. (H.R. 3724)


Tennessee has issued a notice informing taxpayers that the state sales and use tax rate on food and food ingredients decreases from 5.25% to 5%, effective July 1, 2013.(Important Notice No. 13-05, Tennessee Department of Revenue, June 2013)


Tennessee Governor Bill Haslam has signed legislation that delays the effective date of certain Streamlined Sales and Use Tax (SST) Agreement conformity provisions until from July 1, 2013 to July 1, 2015. The delayed provisions include sourcing rules, single article cap limitations, use of a single return covering multiple dealer locations, and special user privilege taxes imposed on certain items instead of sales tax. (S.B. 182, Laws 2013, effective May 20, 2013)


Natural gas that is used in metered ovens at a food production facility producing food for resale qualifies for the sales and use tax manufacturing exemption on gas used in a manufacturing process in Tennessee.  The natural gas is used directly and exclusively in the manufacturing process, and the ovens are metered separately from the rest of the facility.  The gas satisfies the requirement of direct contact with the products being produced because each of the products is exposed to the chemical energy created by the gas.  Additionally, the gas is expended in the course of contact with the taxpayer’s products.  Any natural gas used in unmetered ovens at the facility does not qualify for the exemption because the taxpayer is unable to establish the precise amount of gas used in the ovens.  (Letter Ruling No. 12-15, Tennessee Department of Revenue, August 2, 2012)


Loyalty points issued to customers by a wireless telecommunications company are treated as in-store (retailer) coupons, for purposes of Tennessee sales and use tax. When customers redeem points for a discount on goods or services, the points act as an in-store coupon. The discount is excluded from the taxable sales price, and the sales price equals the net amount paid for the item or service. Use tax is not imposed on the taxpayer when points are exchanged for discounted property, unless the taxpayer fails to collect and remit the proper amount of sales tax on the sale. Points redeemed for nontaxable goods or services are not subject to tax, unless the nontaxable goods or services are bundled with taxable goods or services and sold for a single charge.The sales price of a customer’s monthly service plan is not reduced when the customer receives loyalty points.(Letter Ruling No. 12-30, Tennessee Department of Revenue, November 21, 2012)



Scroll to Top