Fiber-to-the-Home Network Construction Taxable in Tennessee

Jul 17th, 2017

The Tennessee Department of Revenue (DOR) recently ruled that tax applied to lump-sum charges for engineering and constructing a fiber-to-the-home network infrastructure. This infrastructure enables telecommunications companies to provide high-speed Internet access to customers.

The taxpayer was hired to engineer and construct the network and to provide all necessary materials. The construction required installing fiber huts and thousands of miles of cabling on existing telecommunications poles and underground.

The DOR ruled that the materials installed (e.g., fiber, conduit, and other associated items) remained tangible personal property after installation. When items remain tangible personal property after installation, the materials and labor are taxable in Tennessee. Therefore, tax applied to the lump- sum charges for engineering, construction, and materials.