When you think of services, the obvious thought is that a service cannot be taxable because there was no change of title of a tangible item. However, that is not always the case in Tennessee.
Taxable Services Under Tennessee Law
Examples of Taxable Services
Services specified in the law that are subject to sales tax in Tennessee include:
- Rental of rooms, lodging, or other accommodations for less than 90 consecutive days by people in the business of providing overnight lodging services
- Providing parking or storing of motor vehicles in a parking garage or parking lot
- Providing repair of tangible personal property and computer software, including situations where no new parts are provided or when the customer furnishes the parts
- Laundering or cleaning any kind of tangible personal property
- Installing tangible personal property that remains tangible property after installation, including stand-alone installation services where the installer did not sell the property installed (The installation of tangible property that becomes a part of realty when installed is not taxable)
- Installation of computer software
- Enriching of uranium materials or compounds
- Providing short-term rental of space to a dealer for making sales (e.g., booth rental)
- Furnishing intrastate, interstate, and international telecommunications services
- Sales of prepaid calling cards, prepaid phones, and long-distance calling cards
- Ancillary services (i.e., services associated with telecommunications, such as call waiting & forwarding, caller ID, voicemail, and conference bridging)
- Video programming services (i.e., cable and wireless cable and broadband television services)
- Direct-to-home satellite television services
Additional Taxable Situations
Sales tax also applies where the charges for the services are considered part of the sales price of a taxable good or service. The fact that they are listed separately does not negate sales tax. Examples include:
- Delivery charges
- Labor and service costs
- Services necessary to complete the sale furnished by a seller of a taxable good or service
These are considered part of the sales price of the taxable good or service.
Frequently Asked Questions
Are all services in Tennessee exempt from sales tax?
No, not all services are exempt. Tennessee taxes a variety of services, especially those that involve tangible personal property, accommodations, telecommunications, and certain installation or repair activities.
Is labor taxable in Tennessee?
Yes, labor is taxable when it is part of the sale of a taxable good or service. This includes installation, repair, or service work if it’s tied to a taxable item, even if labor is listed separately on the invoice.
What types of accommodations are subject to sales tax?
Sales tax applies to the rental of rooms or lodging for less than 90 consecutive days if provided by businesses offering overnight accommodations, such as hotels or motels.
Are delivery charges taxable in Tennessee?
Yes, delivery charges are considered part of the total sales price of a taxable good or service and are therefore subject to sales tax.
What telecommunications services are taxable in Tennessee?
Tennessee imposes sales tax on intrastate, interstate, and international telecommunications services, including prepaid calling cards, ancillary services like call waiting, and video programming services like cable and satellite TV.