Tennessee Court Exempts Staff Augmentation Services

A taxpayer in the business of furnishing temporary information technology workers to clients was not liable for Tennessee sales and use tax. Since the contract employees worked under the direction, supervision, and complete control of the client, the “in-house software creation” exemption applied. The Court ruled that any staff augmentation business providing temporary employees to work for its clients on software-related projects was not subject to sales tax, as long as the temporary employees were acting as agents and not performing taxable services. (TEKsystems, Inc. v. Chumley, No. 06-177-III, June 3, 2008)

Posted on October 28, 2008