Effective January 1, 2009, Tennessee will impose tax on the sale of digital products.
The tax will apply to retail sales, leases, licenses, and uses of electronically transferred digital audio-visual works, digital audio works, and digital books. Tax does not apply to satellite radio services, or to subscriptions to data processing and information services that allow data to be generated, acquired, stored, processed, or retrieved and delivered by electronic transmission to a purchaser, where the purchaser’s primary purpose for the underlying transaction is the processed data or information.
Tennessee also imposes tax on the sales price of all leases and rentals of computer software, if the lease or rental is a part of, or incidental to, a regularly established business.
Computer software repair and installation services are also subject to tax, regardless of whether the installation is incidental to a sale of software or tangible personal property, or whether any computer software or tangible personal property is transferred in conjunction with the installation service.
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