The Tennessee Supreme Court supports the Appellate Court’s decision that online information services do not constitute taxable telecommunications services.

In this case, the true object test was used to determine whether the item being sold in the transaction was information or telecommunications services. The court held that the object of the sale was information because the vendor sold Internet services to the purchaser so it could access information and perform online functions. The Commissioner disagreed and mentioned the state’s consideration to clarify its telecom statutes in order to avoid similar disputes. (Prodigy services Corp. Inc. v. Johnson, Tennessee Court of Appeals, No. M2002-00918-COA-R3-CV, August 12, 2003, discretionary review denied by the Tennessee Supreme Court December 22, 2003)

Posted on March 15, 2004