Tennessee Rules Online Cloud-Based Platforms Not Taxable

The Tennessee Department of Revenue ruled that a company with two offerings on a cloud-based platform are nontaxable. “The platform offers two cloud-based remote access services, one of which allows brokers to post hauling opportunities for carriers, in exchange for subscription fees. The second service uses the platform’s data to help brokers and carriers determine the fair market value of each route or hauling engagement, and subscribers may purchase this service on a subscription model or for a one-time fee.” Specifically, they ruled the following:

1. Pursuant to TENN. CODE ANN. § 67-6-102(96)(B) (Supp. 2020), telecommunications services do not include the type of online advertising platform or the data processing and information services the Taxpayer provides.
2. [OFFERING 1] is a nontaxable online advertising platform and [OFFERING 2] is a nontaxable data processing and information service.

For both offerings to be taxable, they would have to be characterized as tangible personal property, custom computer software, or an enumerated taxable service. Both offerings involve remote access to the Taxpayer’s platform from subscriber locations within Tennessee; however, a subscriber is only viewing the results. Per TENN. CODE ANN. § 67-6-231(b), information or data processing services and the storage of data are still nontaxable.