1	Sales & Use Tax Laws
2	Tennessee Status Tennessee is an associate-member state of the Streamlined Sales and Use Tax Agreement.
3	New Definitions Effective January 1, 2008
4	Sales Price Means total amount paid or charged for tangible personal property or services
5	Sales Price
6	Sales Price Towing or service call charges that are provided in connection with repair services Document preparation fees associated with the sale of an item Mandatory payments for tips or gratuities with the sale of a meal
7	Price – Delivery Charges
8	Delivery Charges Important Notice 07-20
9	Delivery Charges for Direct Mail
10	Stand-alone Shipping
11	Price – Installation Charges Sales price includes installation charges
12	Sales or Purchase Price Sales price does not include: Cash discount for payment within a period of time. Interest and financing charges on purchases bought on installment plans. Taxes imposed directly on purchasers and stated separately on invoice. Trade-in credit.
13	Price - Discounts Sales price includes consideration received by a seller from a third party on: Manufacturer coupons redeemable at any seller and discount given to purchaser Mail-in rebates not given by the seller Motor vehicle cash rebates Sales price does not include consideration received by a seller from a third party on: - Volume discounts - Motor vehicle manufacturer’s - Cigarette buy-downs incentives - Advertising incentives
14	Leases or Rental Any transfer of possession or control of tangible personal property for a fixed or indeterminate term Does not include a transfer: of title upon payment of title with optional $100 or 1% payment along with an operator
15	Lease or Rental Important Notice 07-15 Effective January 1, 2008, a transaction that requires the transfer of title of property upon completion of required periodic payments and an optional final payment that does not exceed the greater of $100 or 1% of the total required payments is a sale and not a lease or rental. The sales price of the property is subject to tax, and the periodic payments are not subject to tax. This change does not apply to contracts or agreements in effect prior to January 1, 2008.
16	Computer Software Important Notice Computer software includes customized and prewritten computer software.
17	Prewritten Computer Software Prewritten computer software means computer software, including prewritten upgrades, which is not designed and developed by the author or other creator to the specifications of a specific purchaser
18	Medical Definitions
19	Drug Important Notice 07-18
20	Over-the-counter Drug A drug that contains a label (drug facts panel or active ingredients statement) that identifies it as a drug
21	Grooming and Hygiene Products
22	Prosthetic Devices Important Notice 07-22 Worn on or in the body Artificially replace missing portion of body Prevent or correct a physical deformity or malfunction Support a weak or deformed part of the body Include repair and replacement parts Effective January 1, 2008, the change for Tennessee is a prosthetic must be worn on or in the body. Prosthetic devices are exempt from tax regardless whether sold pursuant to a prescription.
23	Prosthetic Devices Examples of prosthetic devices include: Artificial arms and legs Necessary items worn to wear an artificial limb Hearing aids Dental prosthesis Insulin pumps Ankle braces Molded orthopedic shoes Pacemakers Heart valves
24	Prosthetic Devices Prosthetics do not include: Corrective eyeglasses Contact lenses Optometrists continue to pay tax on the purchase price of corrective eyeglasses and contact lenses, and charges to their patients are not subject to tax.
25	Durable Medical Equipment Important Notice 07-22 Equipment that can stand repeated use Primarily serves a medical purpose Not worn in or on the body Does not include disposable medical supplies Includes repair and replacement parts Hospital beds – now DME Ultrasound Humidifier IV poles Blood pressure equipment Blood glucose monitor Nebulizer X-ray
26	Durable Medical Equipment Effective January 1, 2008, DME sold for home use and dispensed with a prescription is exempt from tax. DME purchased by for-profit hospitals, physicians, nursing facilities, and emergency treatment facilities continue to be subject to tax.
27	Durable Medical Equipment Specific exemption from tax for any purchase of:
28	Mobility Enhancing Equipment Important Notice 07-22 Primarily used to increase ability to move from one place to another Appropriate for use in home or auto Not for persons with normal mobility Does not include motor vehicle or equipment on motor vehicle normally provided by motor vehicle manufacturer Includes repair and replacement parts
29	Mobility Enhancing Equipment Effective January 1, 2008, mobility enhancing equipment dispensed with a prescription is exempt from tax. Wheelchairs Canes Crutches Grab bars Chair lifts Walkers Controls installed on motor vehicles Motorized carts
30	Prepared Food Important Notice Ingredients mixed or combined by seller that contain raw animal foods requiring cooking by the consumer are no longer prepared food and are taxed at the reduced tax rate on food. When eating utensils are provided by the seller with food and taxable at the full tax rate.
31	Other Changes
32	Food and Food Ingredients Important Notice 07-14 Food and food ingredients do not include: Prepared food Dietary supplements Candy Alcoholic beverages Tobacco
33	Caskets and Burial Vaults Important Notice 07-16 BEFORE – Sales Tax First $500 exempt from state and local tax Effective January 1, 2008 Total price subject to state and local tax
34	Agricultural Exemption Important Notice 07-12
35	Qualifications for Agricultural Exemption Must meet one or more of these criteria:
36	Agricultural Exemption Farm Machinery BEFORE – Sales Tax Subject to state and local tax Effective January 1, 2008 Exempt from sales and use tax
37	Agricultural Exemption Farm Machinery - ATVs ATVs treated the same as other machinery and equipment used directly and principally in production of agricultural and nursery products for sale and consumption off the premises.
38	Agricultural Exemption Electricity and Liquefied Gas BEFORE – Sales Tax Taxed at 1.5% state rate and no local tax Effective January 1, 2008 Exempt from sales and use tax
39	Agricultural Exemption Dyed Diesel Fuel
40	Agricultural Exemption Tax Responsibility Must use machinery for ag purposes Supplies must be used to produce ag or horticulture products Cannot allow other people to use exemption certificate Must have copy of certificate or card on file Billings must have name, address, and product descriptions
41	Veterinarians Important Notice 08-01
42	Residential Energy Fuel Important Notice 07-17 Energy fuel delivered to the home for residential use continues to be exempt. Energy fuel sold over the counter at the location of the seller is subject to state tax except: Propane sold for residential use in a container of 100 lbs. or more is exempt, and Fuels, including kerosene, dispensed self-service through metered pumps are not sold over the counter. Such sales for residential use continue to be exempt. Documentation is required for residential use exemption.
43	Armed Forces Members Important Notice 07-07 Effective June 28, 2007, statute amended to expand eligibility for members of Armed Forces to make tax-exempt purchases of motor vehicles
44	Motor Vehicles Sold to Armed Forces Members Eligible purchasers who are engaged in active full-time military service stationed in Tennessee: Army, Navy, Air Force, Marine Corps, Coast Guard Tennessee National Guard who participate AGR Reserve members of Army, Navy, Air Force, Marine Corps, Coast Guard who participate AGR (Stationed in Tennessee includes Fort Campbell, Kentucky) Eligible purchasers who are called into active duty and stationed in a combat zone: Tennessee National Guard Reserve members of Army, Navy, Air Force, Marine Corps, Coast Guard (Exemption period expires 90 days after date of release from combat zone)
45	Motor Vehicles Sold to Armed Forces Members Vehicles that qualify for exemption include: Motor vehicles defined in T.C.A. § 55-1-103(3) Motor vehicles titled and registered in Tennessee under Title 55 in the name of qualifying individual or jointly with spouse or lineal relative Off highway motor vehicles defined in T.C.A. § 55-1-101(c) Mobile homes and house trailers Vehicles that do not qualify for exemption include: Leased or rented motor vehicles Vehicles that are not defined as motor vehicles (trailers and semi-trailers) Motor vehicles not registered under Title 55 (farm tractor) Manufactured homes
46	Telecom – Internet Access Important Notice 07-21 Effective November 1, 2005, telecommunication services … purchased or used by an ISP to provide Internet access are exempt from tax. sold by an ISP to provide Internet access are exempt from tax.
47	Telecom. – Internet Access Telecommunication services not used by an ISP to provide Internet access continue to be subject to tax. Examples include: Telephone Service Cellular Service Paging Service Facsimile Service Voice over Internet protocol (VOIP) continues to be subject to tax.
48	Questions